Grace McCormack/Melissa Garrido: Beware Medicare Advantage scams
BOSTON
The 67 million Americans eligible for Medicare make an important decision every October: Should they make changes in their Medicare health insurance plans for the next calendar year?
The decision is complicated. Medicare has an enormous variety of coverage options, with large and varying implications for people’s health and finances, both as beneficiaries and taxpayers. And the decision is consequential – some choices lock beneficiaries out of traditional Medicare.
Beneficiaries choose an insurance plan when they turn 65 or become eligible based on qualifying chronic conditions or disabilities. After the initial sign-up, most beneficiaries can make changes only during the open enrollment period each fall.
The 2024 open enrollment period, which runs from Oct. 15 to Dec. 7, marks an opportunity to reassess options. Given the complicated nature of Medicare and the scarcity of unbiased advisers, however, finding reliable information and understanding the options available can be challenging.
We are health care policy experts who study Medicare, and even we find it complicated. One of us recently helped a relative enroll in Medicare for the first time. She’s healthy, has access to health insurance through her employer and doesn’t regularly take prescription drugs. Even in this straightforward scenario, the number of choices were overwhelming.
The stakes of these choices are even higher for people managing multiple chronic conditions. There is help available for beneficiaries, but we have found that there is considerable room for improvement – especially in making help available for everyone who needs it.
The choice is complex, especially when you are signing up for the first time and if you are eligible for both Medicare and Medicaid. Insurers often engage in aggressive and sometimes deceptive advertising and outreach through brokers and agents. Choose unbiased resources to guide you through the process, like www.shiphelp.org. Make sure to start before your 65th birthday for initial sign-up, look out for yearly plan changes, and start well before the Dec. 7 deadline for any plan changes.
2 paths with many decisions
Within Medicare, beneficiaries have a choice between two very different programs. They can enroll in either traditional Medicare, which is administered by the government, or one of the Medicare Advantage plans offered by private insurance companies.
Within each program are dozens of further choices.
Traditional Medicare is a nationally uniform cost-sharing plan for medical services that allows people to choose their providers for most types of medical care, usually without prior authorization. Deductibles for 2024 are US$1,632 for hospital costs and $240 for outpatient and medical costs. Patients also have to chip in starting on Day 61 for a hospital stay and Day 21 for a skilled nursing facility stay. This percentage is known as coinsurance. After the yearly deductible, Medicare pays 80% of outpatient and medical costs, leaving the person with a 20% copayment. Traditional Medicare’s basic plan, known as Part A and Part B, also has no out-of-pocket maximum.
Traditional Medicare starts with Medicare parts A and B. Bill Oxford/iStock via Getty Images
People enrolled in traditional Medicare can also purchase supplemental coverage from a private insurance company, known as Part D, for drugs. And they can purchase supplemental coverage, known as Medigap, to lower or eliminate their deductibles, coinsurance and copayments, cap costs for Parts A and B, and add an emergency foreign travel benefit.
Part D plans cover prescription drug costs for about $0 to $100 a month. People with lower incomes may get extra financial help by signing up for the Medicare program Part D Extra Help or state-sponsored pharmaceutical assistance programs.
There are 10 standardized Medigap plans, also known as Medicare supplement plans. Depending on the plan, and the person’s gender, location and smoking status, Medigap typically costs from about $30 to $400 a month when a beneficiary first enrolls in Medicare.
The Medicare Advantage program allows private insurers to bundle everything together and offers many enrollment options. Compared with traditional Medicare, Medicare Advantage plans typically offer lower out-of-pocket costs. They often bundle supplemental coverage for hearing, vision and dental, which is not part of traditional Medicare.
But Medicare Advantage plans also limit provider networks, meaning that people who are enrolled in them can see only certain providers without paying extra. In comparison to traditional Medicare, Medicare Advantage enrollees on average go to lower-quality hospitals, nursing facilities, and home health agencies but see higher-quality primary care doctors.
Medicare Advantage plans also often require prior authorization – often for important services such as stays at skilled nursing facilities, home health services and dialysis.
Choice overload
Understanding the tradeoffs between premiums, health care access and out-of-pocket health care costs can be overwhelming.
Turning 65 begins the process of taking one of two major paths, which each have a thicket of health care choices. Rika Kanaoka/USC Schaeffer Center for Health Policy & Economics
Though options vary by county, the typical Medicare beneficiary can choose between as many as 10 Medigap plans and 21 standalone Part D plans, or an average of 43 Medicare Advantage plans. People who are eligible for both Medicare and Medicaid, or have certain chronic conditions, or are in a long-term care facility have additional types of Medicare Advantage plans known as Special Needs Plans to choose among.
Medicare Advantage plans can vary in terms of networks, benefits and use of prior authorization.
Different Medicare Advantage plans have varying and large impacts on enrollee health, including dramatic differences in mortality rates. Researchers found a 16% difference per year between the best and worst Medicare Advantage plans, meaning that for every 100 people in the worst plans who die within a year, they would expect only 84 people to die within that year if all had been enrolled in the best plans instead. They also found plans that cost more had lower mortality rates, but plans that had higher federal quality ratings – known as “star ratings” – did not necessarily have lower mortality rates.
The quality of different Medicare Advantage plans, however, can be difficult for potential enrollees to assess. The federal plan finder website lists available plans and publishes a quality rating of one to five stars for each plan. But in practice, these star ratings don’t necessarily correspond to better enrollee experiences or meaningful differences in quality.
Online provider networks can also contain errors or include providers who are no longer seeing new patients, making it hard for people to choose plans that give them access to the providers they prefer.
While many Medicare Advantage plans boast about their supplemental benefits , such as vision and dental coverage, it’s often difficult to understand how generous this supplemental coverage is. For instance, while most Medicare Advantage plans offer supplemental dental benefits, cost-sharing and coverage can vary. Some plans don’t cover services such as extractions and endodontics, which includes root canals. Most plans that cover these more extensive dental services require some combination of coinsurance, copayments and annual limits.
Even when information is fully available, mistakes are likely.
Part D beneficiaries often fail to accurately evaluate premiums and expected out-of-pocket costs when making their enrollment decisions. Past work suggests that many beneficiaries have difficulty processing the proliferation of options. A person’s relationship with health care providers, financial situation and preferences are key considerations. The consequences of enrolling in one plan or another can be difficult to determine.
The trap: Locked out
At 65, when most beneficiaries first enroll in Medicare, federal regulations guarantee that anyone can get Medigap coverage. During this initial sign-up, beneficiaries can’t be charged a higher premium based on their health.
Older Americans who enroll in a Medicare Advantage plan but then want to switch back to traditional Medicare after more than a year has passed lose that guarantee. This can effectively lock them out of enrolling in supplemental Medigap insurance, making the initial decision a one-way street.
For the initial sign-up, Medigap plans are “guaranteed issue,” meaning the plan must cover preexisting health conditions without a waiting period and must allow anyone to enroll, regardless of health. They also must be “community rated,” meaning that the cost of a plan can’t rise because of age or illness, although it can go up due to other factors such as inflation.
People who enroll in traditional Medicare and a supplemental Medigap plan at 65 can expect to continue paying community-rated premiums as long as they remain enrolled, regardless of what happens to their health.
In most states, however, people who switch from Medicare Advantage to traditional Medicare don’t have as many protections. Most state regulations permit plans to deny coverage, impose waiting periods or charge higher Medigap premiums based on their expected health costs. Only Connecticut, Maine, Massachusetts and New York guarantee that people can get Medigap plans after the initial sign-up period.
Deceptive advertising
Information about Medicare coverage and assistance choosing a plan is available but varies in quality and completeness. Older Americans are bombarded with ads for Medicare Advantage plans that they may not be eligible for and that include misleading statements about benefits.
A November 2022 report from the U.S. Senate Committee on Finance found deceptive and aggressive sales and marketing tactics, including mailed brochures that implied government endorsement, telemarketers who called up to 20 times a day, and salespeople who approached older adults in the grocery store to ask about their insurance coverage.
The Department of Health and Human Services tightened rules for 2024, requiring third-party marketers to include federal resources about Medicare, including the website and toll-free phone number, and limiting the number of contacts from marketers.
Although the government has the authority to review marketing materials, enforcement is partially dependent on whether complaints are filed. Complaints can be filed with the federal government’s Senior Medicare Patrol, a federally funded program that prevents and addresses unethical Medicare activities.
Meanwhile, the number of people enrolled in Medicare Advantage plans has grown rapidly, doubling since 2010 and accounting for more than half of all Medicare beneficiaries by 2023.
Nearly one-third of Medicare beneficiaries seek information from an insurance broker. Brokers sell health insurance plans from multiple companies. However, because they receive payment from plans in exchange for sales, and because they are unlikely to sell every option, a plan recommended by a broker may not meet a person’s needs.
Help is out there − but falls short
An alternative source of information is the federal government. It offers three sources of information to assist people with choosing one of these plans: 1-800-Medicare, medicare.gov and the State Health Insurance Assistance Program, also known as SHIP.
The SHIP program combats misleading Medicare advertising and deceptive brokers by connecting eligible Americans with counselors by phone or in person to help them choose plans. Many people say they prefer meeting in person with a counselor over phone or internet support. SHIP staff say they often help people understand what’s in Medicare Advantage ads and disenroll from plans they were directed to by brokers.
Telephone SHIP services are available nationally, but one of us and our colleagues have found that in-person SHIP services are not available in some areas. We tabulated areas by ZIP code in 27 states and found that although more than half of the locations had a SHIP site within the county, areas without a SHIP site included a larger proportion of people with low incomes.
Virtual services are an option that’s particularly useful in rural areas and for people with limited mobility or little access to transportation, but they require online access. Virtual and in-person services, where both a beneficiary and a counselor can look at the same computer screen, are especially useful for looking through complex coverage options.
We also interviewed SHIP counselors and coordinators from across the U.S.
As one SHIP coordinator noted, many people are not aware of all their coverage options. For instance, one beneficiary told a coordinator, “I’ve been on Medicaid and I’m aging out of Medicaid. And I don’t have a lot of money. And now I have to pay for my insurance?” As it turned out, the beneficiary was eligible for both Medicaid and Medicare because of their income, and so had to pay less than they thought.
The interviews made clear that many people are not aware that Medicare Advantage ads and insurance brokers may be biased. One counselor said, “There’s a lot of backing (beneficiaries) off the ledge, if you will, thanks to those TV commercials.”
Many SHIP staff counselors said they would benefit from additional training on coverage options, including for people who are eligible for both Medicare and Medicaid. The SHIP program relies heavily on volunteers, and there is often greater demand for services than the available volunteers can offer. Additional counselors would help meet needs for complex coverage decisions.
The key to making a good Medicare coverage decision is to use the help available and weigh your costs, access to health providers, current health and medication needs, and also consider how your health and medication needs might change as time goes on.
This article is part of an occasional series examining the U.S. Medicare system.
Grace McCormack is a postdoctoral researcher of Health Policy and Economics, at the University of Southern California
Melissa Garrido is a research professor, Health Law, Policy & Management, at Boston University.
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Sonali Kolhatkar: Why not control all drug prices?
Food and Drug Administration inspectors at a drug company.
Headquarters of Biogen, the big drug company, in Cambridge, Mass. Greater Boston, primarily Boston and Cambridge, hosts more than 1,000 biotechnology companies, ranging from small start-ups to billion-dollar pharmaceutical companies.
Major pharmaceutical companies in the United States are battling with Vermont Sen. Bernie Sanders over an issue that is at the heart of whether we value human wellbeing over corporate profits. As chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), Sanders has vowed to force CEOs of pharmaceutical companies to publicly answer for why their drug prices are so much higher than in other nations. He plans to bring a committee vote to subpoena them. The subpoenas are necessary because—brazenly—the CEOs of Johnson & Johnson and Merck have simply refused to testify to the HELP committee. What are they afraid of?
In a defensive-sounding letter to Sanders, a lawyer for Johnson & Johnson accused the senator of using committee hearings to “punish the companies who have chosen to engage in constitutionally protected litigation.” The letter does not specify the litigation in question—perhaps because it would sound so ridiculous and would reveal the company’s real agenda. Last July, the company, along with Merck and Bristol Myers Squibb, sued the Biden administration for allowing the Medicare program to regulate prescription-drug prices.
It appears that Johnson & Johnson and Merck are indeed afraid of being questioned by lawmakers about drug-profiteering in the U.S.
One pharmaceutical expert, Ameet Sarpatwari, of the Harvard Medical School, explained to The New York Times that, “The U.S. market is the bank for pharmaceutical companies…. There’s a keen sense that the best place to try to extract profits is the U.S. because of its existing system and its dysfunction.” Another expert, Michelle Mello, a professor of law and health policy at Stanford university, told The Times, “Drugs are so expensive in the U.S. because we let them be.”
In other words, it’s been a free-for-all for pharmaceutical companies in the U.S. In 2003, then-President George W. Bush signed a Medicare reform bill into law, promising help for seniors struggling to pay for medications, but that law stripped the federal government of its power to negotiate drug prices for Medicare’s participants. It was a typically Republican, Orwellian move: Promise help to ordinary people and deliver the exact opposite.
Nearly two decades later, the Inflation Reduction Act (IRA), which Biden signed into law in 2022, tied Medicare drug prices to inflation and required companies to issue rebates if prices rose too fast. It was the first time since Bush’s 2003 law that drug manufacturers were subject to any U.S. price regulations. Pharmaceutical companies aren’t having it, and not only did they sue Biden over the IRA, they don’t seem to want to answer for their actions publicly.
It’s not enough for Medicare to be able to cut drug prices. There needs to be nationwide regulation on all drug prices for all Americans. After all, American taxpayers generously subsidize the research and development of most drugs. A report by Sanders’s staff explained that “[w]ith few exceptions, private corporations have the unilateral power to set the price of publicly funded medicines.” The report’s authors chided that “[t]he government asks for nothing in return for its investment.”
What’s more, the report rightly points out that people in other nations benefit from having access to lower-cost drugs that Americans have paid global pharmaceutical companies to develop. For example, SYMTUZA, an HIV medication that scientists at the U.S. National Institutes of Health helped to develop, is available to U.S. patients for a whopping $56,000 a year, while patients in the UK pay only $10,000 a year for the same drug purchased from the same company.
It’s not as if such companies as Johnson & Johnson have some perverse preference for European patients over American ones. It’s merely that their prices are regulated by most other advanced industrial nations. The U.S. “happens to be the only industrialized nation that doesn’t negotiate” drug prices, explained Merith Basey, executive director of Patients For Affordable Drugs NOW, in an interview on Rising Up With Sonali last fall.
Indeed, countries like the UK, France and Germany, offer models for the U.S. in drug-price controls and much has been written about what works best. Further, there is—unsurprisingly—a strong public desire for price controls. According to a Kaiser Family Foundation poll in August 2023, “[m]ajorities across partisans say there is not enough regulation over drug pricing.” Moreover, a whopping 83 percent of those polled “see pharmaceutical profits as a major factor contributing to the cost of prescription drugs.”
There is no shortage of ideas for specific price-control regulations that could work in the U.S. For example, the Center for American Progress’s October 2023 report “Following the Money: Untangling U.S. Prescription Drug Financing’’ delves deep into how market prices are determined for medications and suggests interventions at every stage of drug price setting.
Frankly, such complex solutions would not really be necessary if all Americans could simply join Medicare health coverage and if Medicare’s bargaining power to negotiate drug prices could be applied to all drugs. But, in the absence of this commonsense holistic approach to healthcare, even complex price controls would be better than no price controls.
Predictably, conservative capitalist critics have trotted out the same, tired arguments against government price regulations of pharmaceuticals. “Drug Price Controls Mean Slower Cures,” declared a Wall Street Journal editorial headline. The paper’s editorial board called the IRA, “the worst legislation to pass Congress in many years,” and went as far as accusing the Biden administration of “extortion.”
But who is engaging in extortion? Economists studying the pharmaceutical industry have found that for years companies have been so flush with cash that they have spent hundreds of billions of dollars in stock buybacks and exorbitant executive bonuses and pay packages. “The $747 billion that the pharmaceutical companies distributed to shareholders was 13 percent greater than the $660 billion that these corporations expended on research & development over the decade,” wrote William Lazonick and Öner Tulum in a report for the Institute for New Economic Thinking.
Further, The Wall Street Journal’s screed ignores price controls in the U.K., France, Germany and other nations. If those have no bearing on the speed and quality of drug development, why should U.S. price controls have an impact? And if they do have an impact, then Americans are being unfairly required to bear the burden that people all over the world benefit from.
The Journal’s editorial board made one accurate claim, saying that the IRA “will also give companies the incentives to launch drugs at higher prices and raise prices for privately insured patients to compensate for the Medicare cuts.” The paper made this prediction without any comment on unfettered corporate greed. Indeed, if anyone is engaging in de facto extortion, it appears as though pharmaceutical companies may be the guilty parties in punishing Americans for price controls.
Pharmaceutical companies launched the new year with announced price hikes on at least 500 medications—a massive effort at gouging the public. In contrast, the IRA’s drug-price controls apply to only 10 medications so far, and will be expanded to 15 drugs per year for the next four years, and 20 drugs per year thereafter.
Rather than removing price controls on the paltry numbers of medications the IRA can regulate, an easy fix is to apply those same regulations to most or all drugs. Best of all, in order for such a solution to be implemented, pharmaceutical company CEOs wouldn’t even have to drag themselves into committee hearings to explain away their corporate greed.
Sonali Kolhatkar is a multimedia journalist. She is the founder, host and executive producer of “Rising Up With Sonali,” a weekly television and radio show that airs on Free Speech TV and Pacifica stations.
Sarah Jane Tribble: Beware sales pitches — Medicare Advantage can dangerously trap you
From Kaiser Family Foundation Health News (KFF Health News)
“The problem is that once you get into Medicare Advantage, if you have a couple of chronic conditions and you want to leave Medicare Advantage, even if Medicare Advantage isn’t meeting your needs, you might not have any ability to switch back to traditional Medicare.’’
— David Meyers, assistant professor of health services, policy, and practice at the Brown University School of Public Health
In 2016, Richard Timmins went to a free informational seminar to learn more about Medicare coverage.
“I listened to the insurance agent and, basically, he really promoted Medicare Advantage,” Timmins said. The agent described less expensive and broader coverage offered by the plans, which are funded largely by the government but administered by private insurance companies.
For Timmins, who is now 76, it made economic sense then to sign up. And his decision was great, for a while.
Then, three years ago, he noticed a lesion on his right earlobe.
“I have a family history of melanoma. And so, I was kind of tuned in to that and thinking about that,” Timmins said of the growth, which doctors later diagnosed as malignant melanoma. “It started to grow and started to become rather painful.”
Timmins, though, discovered that his enrollment in a Premera Blue Cross Medicare Advantage plan would mean a limited network of doctors and the potential need for preapproval, or prior authorization, from the insurer before getting care. The experience, he said, made getting care more difficult, and now he wants to switch back to traditional, government-administered Medicare.
But he can’t. And he’s not alone.
“I have very little control over my actual medical care,” he said, adding that he now advises friends not to sign up for the private plans. “I think that people are not understanding what Medicare Advantage is all about.”
Enrollment in Medicare Advantage plans has grown substantially in the past few decades, enticing more than half of all eligible people, primarily those 65 or older, with low premium costs and such perks as dental and vision insurance. And as the private plans’ share of the Medicare patient pie has ballooned to 30.8 million people, so, too, have concerns about the insurers’ aggressive sales tactics and misleading coverage claims.
Enrollees, like Timmins, who sign on when they are healthy can find themselves trapped as they grow older and sicker.
“It’s one of those things that people might like them on the front end because of their low to zero premiums and if they are getting a couple of these extra benefits — the vision, dental, that kind of thing,” said Christine Huberty, a lead benefit specialist supervising attorney for the Greater Wisconsin Agency on Aging Resources.
“But it’s when they actually need to use it for these bigger issues,” Huberty said, “that’s when people realize, ‘Oh no, this isn’t going to help me at all.’”
Medicare pays private insurers a fixed amount per Medicare Advantage enrollee and in many cases also pays out bonuses, which the insurers can use to provide supplemental benefits. Huberty said those extra benefits work as an incentive to “get people to join the plan” but that the plans then “restrict the access to so many services and coverage for the bigger stuff.”
David Meyers, assistant professor of health services, policy, and practice at the Brown University School of Public Health, analyzed a decade of Medicare Advantage enrollment and found that about 50% of beneficiaries — rural and urban — left their contract by the end of five years. Most of those enrollees switched to another Medicare Advantage plan rather than traditional Medicare.
In the study, Meyers and his co-authors muse that switching plans could be a positive sign of a free marketplace but that it could also signal “unmeasured discontent” with Medicare Advantage.
“The problem is that once you get into Medicare Advantage, if you have a couple of chronic conditions and you want to leave Medicare Advantage, even if Medicare Advantage isn’t meeting your needs, you might not have any ability to switch back to traditional Medicare,” Meyers said.
Traditional Medicare can be too expensive for beneficiaries switching back from Medicare Advantage, he said. In traditional Medicare, enrollees pay a monthly premium and, after reaching a deductible, in most cases are expected to pay 20% of the cost of each nonhospital service or item they use. And there is no limit on how much an enrollee may have to pay as part of that 20% coinsurance if they end up using a lot of care, Meyers said.
To limit what they spend out-of-pocket, traditional Medicare enrollees typically sign up for supplemental insurance, such as employer coverage or a private Medigap policy. If they are low-income, Medicaid may provide that supplemental coverage.
But, Meyers said, there’s a catch: While beneficiaries who enrolled first in traditional Medicare are guaranteed to qualify for a Medigap policy without pricing based on their medical history, Medigap insurers can deny coverage to beneficiaries transferring from Medicare Advantage plans or base their prices on medical underwriting.
Only four states — Connecticut, Maine, Massachusetts, and New York — prohibit insurers from denying a Medigap policy if the enrollee has preexisting conditions such as diabetes or heart disease.
Paul Ginsburg is a former commissioner on the Medicare Payment Advisory Commission, also known as MedPAC. It’s a legislative branch agency that advises Congress on the Medicare program. He said the inability of enrollees to easily switch between Medicare Advantage and traditional Medicare during open enrollment periods is “a real concern in our system; it shouldn’t be that way.”
The federal government offers specific enrollment periods every year for switching plans. During Medicare’s open enrollment period, from Oct. 15 to Dec. 7, enrollees can switch out of their private plans to traditional, government-administered Medicare.
Medicare Advantage enrollees can also switch plans or transfer to traditional Medicare during another open enrollment period, from Jan. 1 to March 31.
“There are a lot of people that say, ‘Hey, I’d love to come back, but I can’t get Medigap anymore, or I’ll have to just pay a lot more,’” said Ginsburg, who is now a professor of health policy at the University of Southern California.
Timmins is one of those people. The retired veterinarian lives in a rural community on Whidbey Island, just north of Seattle. It’s a rugged, idyllic landscape and a popular place for second homes, hiking, and the arts. But it’s also a bit remote.
While it’s typically harder to find doctors in rural areas, Timmins said he believes his Premera Blue Cross plan made it more challenging to get care for a variety of reasons, including the difficulty of finding and getting in to see specialists.
Nearly half of Medicare Advantage plan directories contained inaccurate information on what providers were available, according to the most recent federal review. Beginning in 2024, new or expanding Medicare Advantage plans must demonstrate compliance with federal network expectations or their applications could be denied.
Amanda Lansford, a Premera Blue Cross spokesperson, declined to comment on Timmins’ s case. She said the plan meets federal network adequacy requirements as well as travel time and distance standards “to ensure members are not experiencing undue burdens when seeking care.”
Traditional Medicare allows beneficiaries to go to nearly any doctor or hospital in the U.S., and in most cases enrollees do not need approval to get services.
Timmins, who recently finished immunotherapy, said he doesn’t think he would be approved for a Medigap policy, “because of my health issue.” And if he were to get into one, Timmins said, it would likely be too expensive.
For now, Timmins said, he is staying with his Medicare Advantage plan.
“I’m getting older. More stuff is going to happen.”
There is also a chance, Timmins said, that his cancer could resurface: “I’m very aware of my mortality.”
Sarah Jane Tribble is a reporter for KFF Health News
Judith Graham: In Maine and elsewhere, many elderly struggle to pay for basic necessities
Farmer's market in Monument Square, downtown Portland
— Photo by vBd2media
Townhouses in Portland’s West End, completed in 1835
— Photo by Motionhero
PORTLAND, Maine
Fran Seeley, 81, doesn’t see herself as living on the edge of a financial crisis. But she’s uncomfortably close.
Each month, Seeley, a retired teacher, gets $925 from Social Security and a $287 disbursement from an individual retirement account. To make ends meet, she’s taken out a reverse mortgage on her home here that yields $400 monthly.
So far, Seeley has been able to live on this income — about $19,300 a year — by carefully monitoring her spending and drawing on limited savings. But should her excellent health worsen or she need assistance at home, Seeley doesn’t know how she’d pay for those expenses.
More than half of older women living alone — 54% — are in a similarly precarious financial situation: either poor according to federal poverty standards or with incomes too low to pay for essential expenses. For single men, the share is lower but still surprising — 45%.
That’s according to a valuable but little-known measure of the cost of living for older adults: the Elder Index, developed by researchers at the Gerontology Institute at the University of Massachusetts at Boston.
A new coalition, the Equity in Aging Collaborative, is planning to use the index to influence policies that affect older adults, such as property tax relief and expanded eligibility for programs that assist with medical expenses. Twenty-five prominent aging organizations are members of the collaborative.
The goal is to fuel a robust dialogue about “the true cost of aging in America,” which remains unappreciated, said Ramsey Alwin, president and chief executive of the National Council on Aging, an organizer of the coalition.
Nationally, and for every state and county in the U.S., the Elder Index uses various public databases to calculate the cost of health care, housing, food, transportation and miscellaneous expenses for seniors. It represents a bare-bones budget, adjusted for whether older adults live alone or as part of a couple; whether they’re in poor, good or excellent health; and whether they rent or own homes, with or without a mortgage.
Results from the analyses are eye-opening. In 2020, according to data supplied by Jan Mutchler, director of the Gerontology Institute, the index shows that nearly 5 million older women living alone, 2 million older men living alone, and more than 2 million older couples had incomes that made them economically insecure.
And those estimates were before inflation soared to more than 9% — a 40-year high — and older adults continued to lose jobs during the second and third years of the pandemic. “With those stressors layered on, even more people are struggling,” Mutchler said.
Nationally and in every state, the minimum cost of living for older adults calculated by the Elder Index far exceeds federal poverty thresholds, which are used to calculate official poverty statistics. (Federal poverty thresholds used by the Elder Index differ slightly from federal poverty guidelines. Data for each state can be found here.)
One national example: The Elder Index estimates that a single older adult in good health paying rent needed $27,096, on average, for basic expenses in 2021 — $14,100 more than the federal poverty threshold of $12,996. For couples, the gap between the index’s calculation of necessities and the poverty threshold was even greater.
Yet eligibility for Medicaid, food stamps, housing assistance and other safety-net programs that help older adults is based on federal poverty standards, which don’t account for geographic variations in the cost of living or medical expenses incurred by older adults, among other factors. (This isn’t an issue for older adults alone; the poverty measures have been widely critiqued across age groups.)
“The poverty rate just doesn’t cut it as a realistic look at the struggles older adults are having,” said William Arnone, chief executive officer of the National Academy of Social Insurance, one of the new coalition’s members. “The Elder Index is a reality check.”
In April, University of Massachusetts researchers showed that Social Security benefits cover only a fraction of what older adults need for basic living expenses: 68% for a senior in good health who lives alone and pays rent and 81% for an older couple in the same situation.
“There’s a myth that Social Security and Medicare miraculously take care of all of people’s needs in older age,” said Alwin, of the National Council on Aging. “The reality is they don’t, and far too many people are one crisis away from economic insecurity.”
Organizations across the country have been using the Elder Index to convince policymakers that older adults need more assistance. In New Jersey, where 54% of seniors are economically insecure according to the index, advocates used the data to protect property-tax relief programs for older adults during the pandemic. In New York, where nearly 60% of seniors are economically insecure, advocates persuaded the legislature to raise the Medicaid income eligibility threshold.
In San Diego, where as many as 40% of seniors are economically insecure, Serving Seniors, a nonprofit agency, persuaded county officials to use pandemic-related stimulus payments to expand senior nutrition programs. As a result, the agency has been able to double production of home-delivered meals, to more than 1.5 million annually.
Officials are often wary of the financial impact of expanding programs, said Paul Downey, president and CEO of Serving Seniors. But, he said, “we should be using a reliable measure of economic security and at least know how well the programs we’re offering are doing.” By law, California’s Area Agencies on Aging use the Elder Index in their planning process.
Maine is No. 5 on the list of states ranked by the share of seniors living below the Elder Index, 56%. For someone in Fran Seeley’s situation (an older adult who is in excellent health, lives alone, owns a house, and doesn’t pay a monthly mortgage), the index suggests $22,560 a year is necessary — $3,200 more than Seeley’s annual income and $9,500 above the federal poverty threshold.
Fran Seeley’s income — from Social Security, a retirement account, and a reverse mortgage — comes to about $19,300 a year. With inflation increasing, “it means I have to cut back in any way I can,” Seeley says.
A look at Seeley’s budget reveals how quickly necessary expenses accumulate: $2,041 annually for Medicare Part B (this is deducted from her Social Security check), $4,156 for property and stormwater taxes, $390 for home insurance, $320 for furnace cleaning, $1,440 for heat, $125 for water, $500 for gas and electricity, $300 for property maintenance, $1,260 for phone and Internet, $150 for car registration, $640 for car insurance, $840 for gasoline at current prices, $300 for car maintenance, and $4,800 for food.
The total: $17,262. And that doesn’t include the cost of medications, clothing, toiletries, any kind of entertainment, or other incidentals.
Seeley’s great luxury is caring for four cats, which she describes as “the light of my life.” Their annual wellness checks cost about $400 a year, while their food costs about $1,080.
With inflation now making her budget even tighter, “it means I have to cut back in any way I can. I find myself going into stores and saying, ‘No, I don’t need that,’” Seeley said. “The biggest worry I have is not being able to afford living in my home or becoming ill. I know that medical expenses could wipe me out in no time financially.”
Judith Graham is a Kaiser Health News Reporter.
James P. Freeman: Will we actually see a predicted generational wealth transfer of $70 trilllion?
"The Young Heir Takes Possession Of The Miser's Effects,’’ from William Hogarth's “A Rake's Progress’’.
One Financial Center and nearby buildings in Boston’s financial district. The city is a national center for investing for retirement.
I was invited recently to an online seminar with this title: “Preparing for the Great Generational Wealth Transfer.”
As a financial professional -- with experience as a private wealth advisor -- I found the subject matter to be particularly intriguing. After all, as a marketer and thought leader today, I look at emerging trends -- behavioral, demographic, and technological, among others -- as a means by which to foster and sustain long-term relationships with clients and prospective clients, alike. All of the looming changes articulated during the webinar (and others I have seen on the horizon) will certainly provide challenges and opportunities in the financial advice business for both the consumer and advisor. But the changes herewith will be seismic.
The webinar presentation was inspired by research conducted by Boston-based Cerulli & Associates, a firm which delivers financial market intelligence to the industry. Cerulli projects that, in the greatest intergenerational reallocation of wealth ever, $70 trillion will be transferred between generations (Silent Gen and Baby Boomers to Gen X and Millennials) by the year 2042. That prediction alone is worthy of our collective attention.
But will that happen? I have my doubts.
Surely, retirement for today’s younger generations will be vastly different from retirement experienced by today’s older generations. But the dollar volume estimated to be passed down seems to me to be fantastically overcooked. Expect the expected. Let me give you my unified field theory.
First, it is important to look at the emerging demographic patterns for a sense of perspective.
Strength in numbers
While the Silent Gen (1928-1945) still plays a role in this “great transfer,” the focus here remains on Baby Boomers. Boomers were born between 1946 and 1964 -- at one point seventy-six million strong. The first Boomer reached the age of 65 -- commonly called “retirement age” -- in early 2011. Today, 10,000 Boomers are turning 65 every single day. Beginning in 2024, however, that figure accelerates to 12,000 per day, in what is being called “Peak 65.” The pace will decline markedly as the last Boomer turns 65 in December 2029. Even more incredibly, sometime during the next decade, one in five Americans will be over the age of 65. That has never happened before.
Gen X members (sometimes referred to as the “MTV Generation”) were born between 1965 and 1980. Today they are between the ages of 41 and 56 and are in the peak earnings years of their careers; the oldest are just starting to contemplate retirement. According to 2019 U.S. census data, they are 65.2 million strong. The oldest Gen Xer has more in common with the youngest Boomer while the youngest Gen Xer has more in common with the oldest Millennial. Arguably, Gen X is a shadow generation given that it is smaller than the Boomer generation preceding it and the Millennial generation following it. And notably, Millennials have eclipsed all other generations for sheer size. So, the attention paid to them is warranted.
Millennials were born between 1981 and 1996. In 2016, Millennials became the largest generation in the U.S. labor force. With 87 million members, Millennials also now represent the largest demographic group in America, surpassing the Boomer generation. In fact, Millennials are the largest adult cohort in the world. Right before their eyes, Boomers are ceasing to be the most influential generation. More than half of Americans are now Millennials or younger, reports brookings.edu
Nonetheless, as the greying of America continues, the median age is now just over 38. Fifty years ago, it was closer to 28 and has been rising ever since.
Adrian Johnstone, president, and co-founder of Practifi, a business management platform for financial advice, was the featured webinar speaker. He delivered examples of the stark contrasts between the generations in how they view the future and view retirement. As you can imagine, there are big cultural differences between these generations. It literally is a generation gap
Understandably, then, Boomers and Millennials have different objectives. At least as understood right now.
Demographics is destiny
Boomers more or less created the financial retirement business. As I like to say it was “of Boomers, by Boomers, and for Boomers.” Not too long ago, a Boomer was likely to measure success in a retirement portfolio by “benchmarking.” For example, this meant comparing the performance of an individual investment portfolio to something like the Standard & Poor’s 500 Index, a broad market index that measures performance. It was an accomplishment if you beat a given index in a given year. But defining success has evolved over time.
Smart people began saying this about benchmarking: “So what?”
Retirement planning was more than just investment performance. Industry leaders started looking at planning in a much more holistic way. Soon, business models would build around a “process” to drive success based on “goal setting.” The thinking was that you had a greater probability of achieving your goals if you followed a process. That concept changed the mindset from the short-term to long-term. Indeed, retirement planning was a long-term journey. The rationale was that retirees should consider whether or not they were achieving their goals as the best way to effectively measure progress in retirement. “Goals” was a much broader concept than “benchmarks,” yet it was much more focused, too -- buying a second home, taking annual vacations, investing in long-term care, setting up gifting, losing weight, etc. Markets go up and go down. But if you could achieve your overall goals despite inevitable market turbulence that was the new paradigm for defining success in retirement.
My sense, however, is that this current model is beginning to change as well. While goals will always be part of retirement planning, I question if setting lofty, long-term goals (even if practical) may prove to be elusive for many retirees going forward. My reasoning is straightforward.
The youngest Boomer and oldest Gen X have had to weather three once-in-a-lifetime events that affected retirement planning and saving in just the last twenty years. (Dotcom in 2000, Great Recession in 2009, COVID-19 in 2020). Combine these events with future funding issues for Social Security, Medicare, and Long-Term Care needs, it paints a less certain financial picture. Throw in the fact that this demographic carve-out is more in debt than older retirees and the relative financial future seems even less assured for them. Goals, then, seem illusory.
Given these realities, I believe that financial planning will once again morph into a new realm. Discussions will center more on “lifestyle” (or standard of living) and less on goal setting. Maintaining -- if not improving -- one’s lifestyles is a more focused conversation than goals; it’s much more tangible than goals, too. Telling clients they will not be able to maintain a given lifestyle is much more powerful than telling them they can not reach a goal.
So, in the span of fewer than forty years, you can see the progression of retirement planning models in how performance is often measured. It began with comparing benchmarks to setting goals and will likely shift even more to living desired lifestyles. Enter Millennials…
Now please fasten your seatbelts before departure
The Practifi webinar suggested even more pronounced changes when Millennials begin serious retirement consideration. According to Johnstone, this generation will be mostly concerned about values -- such as social responsibility and the impact of their decisions on the larger society. In other words, for them, retirement planning must center around their values, with everything else, including, presumably, performance, of less or equal import.
That is a radical shift in priorities.
Additionally, financial advisors should anticipate other changes in how future generations approach retirement. They are just as compelling.
The retirement landscape will probably look unrecognizable after the last Boomer retires in 2029, presenting new complexities for all interested parties.
Surely, there will be a transfer of wealth (more about which anon) and advisors will need to be aligned with the interests of the next generation (values more than goals). Likewise, “NextGen” retirees will have crypto currencies and ESG investments (environment, social, and governance) as staples in their portfolios. They will also be more inclined to make micro loans, a newfangled investment alternative. Fee structures will undoubtedly be altered. Marketing will be impacted by implementing AR (augmented reality) into social media and other platforms. The regulatory apparatus will also look hugely different. And AI (artificial intelligence) software tools will complement human advisors. Finally, future retirees will be more financially literate, more skeptical, and more engaged (via technology) about, well, everything.
Advisors in the future doubtless must change from a Boomer-centric retirement model to a Millennial-centric retirement model not only to accommodate the next retirement class but to prepare for the predicted wealth transfer. For Johnstone, he sees a sea-change from the client point of view, too. He believes that Boomers are “delegators” of their retirement (to advisors). Whereas Millennials will be “validators” of their retirement (from advisors).
Show me the money!
Notwithstanding the extraordinary metamorphosis about to play out in a couple of years in terms of demographics and service delivery models, the real question is about assets. This past June, The Wall Street Journal reported that the great transfer has already begun. It cited Federal Reserve data indicating that Americans over the age of 70 had already accumulated “a net worth of nearly $35 trillion.” That amounts to 27 percent of all U.S. wealth, up from 20 percent three decades ago.
Still, I am not entirely convinced that $70 trillion in assets will ultimately be transferred to heirs and charities, as predicted. That stockpile of money seems high. To better understand that dollar amount, it would mean the transference of roughly $3.3 trillion every year for the next twenty years. Put another way, the total would be the combination of President Biden’s $1.9 trillion Build Back Better Act and $1.2 trillion Infrastructure Investment and Jobs Acts, annually, up to 2042.
Labyrinthine financial trends might well offset the amount substantially.
The real question should be: Will known (and unknown) massive unfunded liabilities eventually absorb much of the $70 trillion because we have simply failed to live within our means today? We have shifted many of today’s financial burdens on younger generations and even generations not yet born. The arithmetic just doesn’t square.
Conceivably, much of these assets would be liquidated -- and hence evaporated -- prior to any transferring or gifting because of future costs. Consider the following four factors: poor savings, rising healthcare costs, Social Security funding concerns, and high personal (not to mention high institutional and governmental) debt loads. It is the liabilities side of the balance sheet that concerns me. Not the assets side.
Something has gotta give
POOR SAVINGS
Despite a staggering amount of cash flooding into the American economy as part of COVID-19 relief (read about the $5.2 trillion in pandemic fiscal stimulus), not to mention an absurdly accommodative monetary policy, America still has a savings problem. (Remember food lines queuing up just a couple of weeks after the first lockdowns in early 2020? We were told people did not have money saved for such “emergencies.”) I don’t subscribe to the idea -- as perpetuated by economists, usually the last group of people “in-the-know” -- that Americans have significantly improved their savings rates. Saving is a behavioral attribute. Have behaviors really changed for the long term? Any built up savings is likely a temporary phenomenon. I write that because much of the chatter we hear from financial commentators centers on all this “pent up demand” stemming from the pandemic. Such demand, we are told, is exacerbating the supply-chain problems. A probable outcome will be all the extra cash will be spent.
Earlier this year the Insured Retirement Institute released the results of a survey conducted on workers between the ages of 40 and 73. Its findings were unsurprising but consistent with many similar studies on worker preparedness for retirement. Two key takeaways were as follows: savings behavior needs to improve, and retirement income expectations are unrealistic. The survey found that 51 percent of respondents had less than $50,000 saved for retirement. Furthermore, the report concluded that “Among savers, savings rates are not nearly high enough for even the youngest respondents to grow their nest eggs to a level sufficient for meeting their income and budget expectations.” The survey was conducted after much of the stimulus was already distributed into personal and small business accounts.
And, perhaps most alarming, the institute wrote that, across several measures of retirement preparedness, “most [respondents] fear they will not have enough income, will not be prepared to transition into retirement, will not have enough money for medical expenses or long-term care should the need arise, and may not be able to live independently for the entirety of their retirement.” A large number of Americans are not putting enough aside to catch up.
Americans’ use of retirement plans has changed dramatically over the last several decades, too. In the past, good-ole-fashion “defined benefit plans” (think pensions) were the norm. They were a stable retirement income source for millions of retirees. But many pension plans -- especially in the public sector -- are grossly underfunded today. The 401(k) was born in 1978 and known as a “defined contribution plan.” Such contribution plans were devised to supplement benefit plans but over time they ended up supplanting those benefit plans. And at their root, 401(k) plans were really DIY plans -- or “do-it-yourself” plans. The result was that the American worker became the principal source of his or her retirement savings, not a corporation or municipality. And the data confirm that Americans are not contributing enough to these plans. Therefore, it is hard to see where additional savings are built into future retirement portfolios -- unless people rely mostly upon enormous equity gains in real estate holdings. Besides, government policy discourages saving (with artificially and historically low interest rates) and encourages speculating (with greater yields in riskier market investments). This is even more outrageous considering higher inflation has returned with gusto.
As 2021 ends, I would imagine that future studies examining the impacts of all this stimulus will confirm that the notion of any substantive increase in savings and savings rates is a grand chimera.
RISING HEALTHCARE COSTS
Nearly ten years ago, in a 2012 speech at the U.S. Naval War College, conservative columnist George Will, then 69, showed those in the audience his Medicare Card. He had also previously shown it to his doctor. To which his doctor said, “That’s wonderful, George, we’ll send your bills to your children.”
Both “Romneycare” (in Massachusetts) and “Obamacare” (at the national level) largely fulfilled their aims of insuring many more of its residents and citizens, respectively, for healthcare. However, neither program did anything to bend the cost curve. In Massachusetts, for instance, healthcare costs now represent 36 percent of total state spending. It was 31.5 percent just three years ago. For fiscal 2008, the figure was approximately 30 percent.
In case you missed it, healthcare costs have been rising and will continue rising, yet few want to pay for spiraling costs. According to healthsystemtracker.org, health spending in America totaled $74.1 billion in 1970. Three decades later, by 2000, health expenditures reached about $1.4 trillion. Put another way, “In 1970, 6.9 percent of the gross domestic product (GDP) in the U.S. was spent toward total health spending (both through public and private funds). By 2019, the amount spent on healthcare has increased to 17.7 percent of the GDP.” It is expected that the number will reach 18 percent soon.
Healthcare costs in this country continue to accelerate because of the intersection of demographics (Boomers retiring in large numbers) and better medicine (diagnostic, therapeutic, pharmacologic). Today, we are consuming $3.8 trillion or $11,582 per person, annually, on healthcare. This is nearly three times what was spent only twenty years ago. And with more Boomers consuming even more healthcare in the future, our healthcare system will strain with greater costs. Spending will sharply hasten.
Data in a 2021 extract provided by the Robert Wood Johnson Foundation reveal that American households paid, on average in 2018, 18.5 percent of their income towards healthcare costs. In addition, “According to Medicare beneficiaries’ data, in 2017, the average total health expenditures in their last year of life was $66,176.”
Medicare currently covers nearly 64 million Americans today. And funding for the program accounted for more than 4 percent of the U.S. GDP in 2020, reports medicareresources.org. Total Medicare spending stood at $917 billion last year, and it is expected to grow to $1.78 trillion in 2031, or two years after the last Boomer retires.
Medicare, established in 1965 as part of The Great Society, has critical funding challenges just like Social Security -- but they are more immediate. It is estimated that the Medicare Trust Fund will be exhausted in 2024 unless Congress acts to implement new reforms. Barring no changes, the Congressional Budget Office projects that following 2024 exhaustion, Medicare will only have sufficient tax receipts to be able to pay 83 cents for every dollar covered. There are three practical solutions to avoid insolvency, concluded forbes.com this past March: “Increase revenues flowing into the trust fund by at least $700 billion to extend solvency to 2036 (experts typically focus on 10-year time horizons); cut spending on Medicare beneficiaries or increase their monthly premiums; or figure out a combination of these two methods.”
All of these challenges were known as far back as twenty years ago. In 2002, Health Services Research issued a study named “The 2030 Problem: Caring for aging Baby Boomers.” Few have paid heed to the warnings that it issued back then. “To meet the long-term care needs of Baby Boomers,” its authors wrote, “social and public policy changes must begin soon.” In 2021, it is obvious that these changes never occurred.\
SOCIAL SECURITY FUNDING
In many respects, healthcare cost concerns are a bigger worry than Social Security because the latter is more manageable and knowable: We have decades of economic data and demographic data to ascertain future costs. We know healthcare costs will rise but it is such a wildcard that it is difficult to enumerate actuarial costs. With Social Security the math is right in front of us, and it is largely predictable. But reforms are needed.
According to the Social Security Administration, the ratio of covered workers to beneficiaries was 159 to 1 in 1940; that figure shrank to 2.8 to 1 in 2013. It is estimated to be 2.7 today. However, when the last Boomers reach age 75, the trustees of the program project that “the ratio will fall to 2.2 to 1 in 2039.”
And unless, in this politically charged environment, changes are made to how Social Security is funded, it will not support paying out 100 percent of benefits beginning in 2034. Barring no change, payroll taxes will only then be able to distribute approximately 75 percent of promised payments. Like Medicare, it would seem that a combination of higher taxes and lower payouts would be the most likely outcome. But that is impossible to predict.
Estimates vary on how much retirees rely entirely on Social Security as a source of income in later years.
The National Institute on Retirement Security (NIRS) in January 2020 reported that, “A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement.” That analysis was called into question by Andrew G. Biggs, senior fellow at the American Enterprise Institute. Biggs has written extensively on retirement matters. Using different data points collected by other governmental agencies, he found there is not a consensus on the NIRS thesis. Instead, there is evidence that between 12 percent and 20 percent of older Americans rely solely on Social Security for support. Even if those figures are closer to reality, it is a fact that millions of retirees depend on Social Security as a significant source of income. So, this question remains pertinent: What would a potential 25 percent reduction in Social Security benefits do to seniors?
Arguably, in order to finance the current level of Medicare and Social Security benefits for future retirees (will there ever be higher levels of spend?), higher payroll taxes would seemingly be the quickest fix. And it is not too farfetched to reason that inheritance taxes would also rise to address these systemic problems, too. These measures would certainly eat into the great transfer of $70 trillion.
IN DEBT WE TRUST
My favorite website may be debt.org.
The site is really an advocacy platform that wishes to help people who are in debt, but I find it as a reliable financial resource. Its “Demographics of Debt” page is a helpful amalgam of disparate data points that exposes a crisis like an asteroid approaching earth. Recent updates to the page have included debt tabulations made during the pandemic.
American household debt hit a record $14.6 trillion in the spring of 2021, according to the Federal Reserve. (Housing likely accounts for 71 percent of that total.) Furthermore, last year, rather disturbingly, “The total U.S. consumer debt balance grew $800 billion, according to Experian. That was an increase of 6 percent over 2019, the highest annual growth jump in over a decade.” Borrowers have been the beneficiaries of historically low interest rates for over a decade now. This has, in my opinion, been an inducement to borrow more without consequences. But with higher inflation now center stage for an economy that has experienced benign inflation for decades, it would seem that the Federal Reserve would be poised to raise interest rates sooner than later. Such action would make it more expensive to borrow and would obviously make servicing debt more expensive, especially for adjustable-rate debt instruments. (Interestingly, Adjustable Rate Mortgages make up just 3.4 percent of all mortgage applications today; as of 2020, approximately 44 percent of U.S. consumers have a mortgage; in Massachusetts the average individual mortgage balance is $261,345, as of 2020.)
I am keenly interested in the breakdown of debts among the demographic groups. The anticipated great transfer of wealth would imply that older generations (Silent Gen and Boomers) would be relatively unencumbered by debts to allow them to freely pass along assets to heirs (Gen X and Millennials) and charities. On the contrary, the data suggest that picture less clear.
Of these four demographic groups, the Silent Gen has the lowest amount of average debt per member ($41,281), while Millennials have the third lowest ($87,448). What is somewhat surprising is that Boomers place second, having an average of $97,290 of debt per member. Meanwhile, Gen X can claim the largest debt burdens for this comparison with an average of $140,643 per Xer. Academically, this all makes sense as Gen X is still paying off the bulk of its mortgage obligations and the same may be said for the youngest Boomer as well.
It seems to me, that despite the fact that Boomers are no longer the largest demographic cluster, they will largely determine whether or not the great transfer of assets actually happens.
I do not see how the bulk of $70 trillion ever gets delivered to younger generations. I believe that future costs (for healthcare, Medicare, and Social Security) will emphatically eat up much of those assets. Boomers will inevitably be more “takers” than “makers” of the great transfer. Finally, I believe that servicing existing individual debt loads will be as much of a factor in the future as it is today. We also should be mindful of the exorbitant levels of debt at the government and institutional levels that will also need adequate funding. Time was when we borrowed for the future. We now borrow from the future. There is no escape from The Great Debt.
Years ago, I did a short stint as a substitute teacher. I would argue that the elementary classroom is a more challenging environment than the Wall Street boardroom, and higher learning more perspicacious than higher returns. One fine day I was teaching first graders. There was some free time before dismissal, so I simply asked them to draw anything they wanted -- a token for the ride home after school. It was a fun exercise. As I was circulating around the children, watching future Picassos toil away, I came across a young girl named Sally. I couldn’t quite figure out what she was sketching. So, I asked, “Sally, what is that?” She paused, and with steely determination, she said, “I am drawing a picture of God.” I made the mistake of responding, “Well, Sally that’s quite something because no one knows what God looks like.” To which she retorted, with breezy confidence: “They will in a minute.”
With regard to the great wealth transfer and attendant ramifications, we will see in a New York minute.
James P. Freeman is the director of marketing at Kelly Financial Services, LLC, based in in Greater Boston. For much of his professional career in financial services he was an officer in the bond administration departments of a number of banks and trust companies. This content is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Kelly Financial Services, LLC, its subsidiaries, and affiliates. Kelly Financial Services, LLC does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current, or complete, and such information is at all times subject to change without notice. The opinions expressed in this content and or any attachments are those of the author and not necessarily those of Kelly Financial Services, LLC. Kelly Financial Services, LLC does not provide legal, accounting or tax advice and each person should seek independent legal, accounting and tax advice regarding the matters discussed in this article.
Harris Meyer: Leaders of some New England and other states look to curb prescription-drug-price increases
Massachusetts Gov. Charlie Baker is looking for support from state legislators for his plan to penalize price hikes for a broader range of drugs as part of his new budget proposal.
Fed up with a lack of federal action to lower prescription drug costs, state legislators around the country are pushing bills to penalize drugmakers for unjustified price hikes and to cap payment at much-lower Canadian levels.
These bills, sponsored by both Republicans and Democrats in a half-dozen states, are a response to consumers’ intensified demand for action on drug prices as prospects for solutions from Congress remain highly uncertain.
Eighty-seven percent of Americans favor federal action to lower drug prices, making it the public’s second-highest policy priority, according to a survey released by Politico and Harvard University last month. That concern is propelled by the toll of out-of-pocket costs on Medicare beneficiaries, many of whom pay thousands of dollars a year. Studies show many patients don’t take needed drugs because of the cost.
“States will keep a careful eye on Congress, but they can’t wait,” said Trish Riley, executive director of the National Academy for State Health Policy (NASHP), which has drafted two model bills on curbing prices that some state lawmakers are using.
Several reports released last month heightened the pressure for action. The Rand Corp. said average list prices in the U.S. for prescription drugs in 2018 were 2.56 times higher than the prices in 32 other developed countries, while brand-name drug prices averaged 3.44 times higher.
The Institute for Clinical and Economic Review found that drugmakers raised the list prices for seven widely used, expensive drugs in 2019 despite the lack of evidence of substantial clinical improvements. ICER, an independent drug research group, estimated that just those price increases cost U.S. consumers $1.2 billion a year more.
Democratic legislators in Hawaii, Maine and Washington recently introduced bills, based on one of NASHP’s models, that would impose an 80% tax on the drug price increases that ICER determines in its annual report are not supported by evidence of improved clinical value.
Under this model, after getting the list of drugs from ICER, states would require the manufacturers of those medicines to report total in-state sales of their drugs and the price difference since the previous year. Then the state would assess the tax on the manufacturer. The revenue generated by the tax would be used to fund programs that help consumers afford their medications.
“I’m not looking to gather more tax dollars,” said Democratic Sen. Ned Claxton, the sponsor of the bill in Maine and a retired family physician. “The best outcome would be to have drug companies just sell at a lower price.”
Similarly, Massachusetts Gov. Charlie Baker, a Republican, proposed a penalty on price hikes for a broader range of drugs as part of his new budget proposal, projecting it would haul in $70 million in its first year.
Meanwhile, Republican and Democratic lawmakers in Hawaii, Maine, North Dakota, Oklahoma and Rhode Island have filed bills that would set the rates paid by state-run and commercial health plans — excluding Medicaid — for up to 250 of the costliest drugs to rates paid by the four most populous Canadian provinces. That could reduce prices by an average of 75%, according to NASHP.
Legislators in other states plan to file similar bills, Riley said.
Drugmakers, which have formidable lobbying power in Washington, D.C., and the states, fiercely oppose these efforts. “The outcomes of these policies would only make it harder for people to get the medicines they need and would threaten the crucial innovation necessary to get us out of a global pandemic,” the Pharmaceutical Research and Manufacturers of America, the industry’s trade group, said in a written statement.
Colorado, Florida and several New England states previously passed laws allowing importation of cheaper drugs from Canada, an effort strongly promoted by former President Donald Trump. But those programs are still being developed and each would need a federal green light.
Bipartisan bills in Congress that would have penalized drugmakers for raising prices above inflation rates and capped out-of-pocket drug costs for enrollees in Medicare Part D drug plans died last year.
“If we waited for Congress, we’d have moss on our backs,” said Washington state Sen. Karen Keiser, a Democrat who sponsored the state’s bill to tax drug price hikes.
Based on ICER data, two of the drugs that could be targeted for tax penalties under the legislation are Enbrel and Humira — blockbuster products used to treat rheumatoid arthritis and other autoimmune conditions.
Since acquiring Enbrel in 2002, Amgen has raised the price 457% to $72,240 for a year’s treatment, according to a report last fall from the House Committee on Oversight and Reform.
In a written statement, Amgen denied that Enbrel’s list price increase is unsupported by clinical evidence and said the company ensures that every patient who needs its medicines has “meaningful access” to them.
The price for Humira, the world’s best-selling drug, with $20 billion in global sales in 2019, has gone up 470% since it was introduced to the market in 2003, according to AnalySource, a drug price database.
In contrast, AbbVie slashed Humira’s price in Europe by 80% in 2018 to match the price of biosimilar products available there. AbbVie patents block those biosimilar drugs in the U.S.
AbbVie did not respond to requests for comment for this article.
Manufacturers say the list price of a drug is irrelevant because insurers and patients pay a significantly lower net price, after getting rebates and other discounts.
But many people, especially those who are uninsured, are on Medicare or have high-deductible plans, pay some or all the cost based on the list price.
Katherine Pepper of Bellingham, Wash., has felt the bite of Humira’s list price. Several years ago, she retired from her job as a management analyst to go on Social Security disability and Medicare because of her psoriatic arthritis, diabetes and gastrointestinal issues.
When she enrolled in a Medicare Part D drug plan, she was shocked by her share of the cost. Since Pepper pays 5% of the Humira list price after reaching Medicare’s catastrophic cost threshold, she spent roughly $15,000 for the drug last year.
Medicare doesn’t allow drugmakers to cover beneficiaries’ copay costs because of concerns that it could prompt more beneficiaries and their doctors to choose high-cost drugs and increase federal spending.
Many patients with rheumatoid and other forms of arthritis are forced to switch from Enbrel or Humira, which they can inject at home themselves, to different drugs that are infused in a doctor’s office when they go on Medicare. Infusion drugs are covered almost entirely by the Medicare Part B program for outpatient care. But switching can complicate a patient’s care.
“Very few Part D patients can afford the [injectable drugs] because the copay can be so steep,” said Dr. Marcus Snow, an Omaha, Nebraska, rheumatologist and spokesperson for the American College of Rheumatology. “The math gets very ugly very quickly.”
To continue taking Humira, Pepper racked up large credit card bills, burning through most of her savings. In 2019, she and her husband, who’s retired and on Medicare, sold their house and moved into a rental apartment. She skimps on her diabetes medications to save money, which has taken a toll on her health, causing skin and vision problems, she said.
She’s also cut back on food spending, with her and her husband often eating only one meal a day.
“I’m now in a situation where I have to do Russian roulette, spin the wheel and figure out what I can do without this month,” said Pepper.
Harris Meyer is a Kaiser Health News reporter.
This article is part of a series on the impact of high prescription drug costs on consumers made possible through the 2020 West Health and Families USA Media Fellowship.
Harris Meyer: @Meyer_HM
Sophia Paslaski: Supreme Court just made the case for Medicare for All
From OtherWords.org
People of the menstruating persuasion: how dare you. The highest court in the land demands to know.
This July, the Supreme Court of the United States decided that President Trump, who does not have a uterus, was quite right to object to Obama-era rules under the Affordable Care Act that allowed Americans who do have uteri access to free birth control through their employer-provided health-insurance plans.
Specifically, NPR reports, the Supreme Court upheld a Trump administration rule that “would give broad exemptions from the birth control mandate to nonprofits and some for-profit companies that object to birth control on religious or moral grounds.”
Not just religious — “moral.”
So even if Jesus is cool with it, if you have personal “moral” quandaries with the people in your employ taking birth control, you’re free to cut your workers off from essential medications.
And I do mean absolutely essential. While some of us use ACA-covered birth control like “the pill” or an intrauterine device (IUD) as an optional measure to prevent pregnancy, many of us depend on it to treat hormonal conditions.
Birth-control medication is commonly used to help manage premenstrual syndrome and painful periods. Doctors prescribe it to control the growth of painful ovarian cysts that can lead to life-threatening complications if left untreated. It helps those with challenges like depression level out the hormonal fluctuations that can trigger cyclical mood changes around menstruation.
And for one in 10 of us, it is the best line of defense, short of surgery, against endometriosis, a debilitating condition that many struggle to manage without birth-control medication.
But perhaps that’s not the point.
Plenty of us have made this medical appeal before to no avail. Medicine doesn’t seem to matter to those employers who deem themselves religiously or morally opposed to “providing” birth control to their employees — as if employers are handing out pill packs at the reception desk like free swag at Comic Con.
Maybe, as always, this is about the medical-industrial complex.
In this country, where much health insurance is tied to employment, employers often take the position that they are “giving” their employees health care — and therefore, that they are entitled to some say over what that care entails.
That’s nonsense — but so is tying health care to employment in the first place.
Politicians who oppose Medicare for All like to cite the concerns of voters who, allegedly, love their employer-provided health insurance. But this court decision proves what most of us, I expect, already know: private health insurance isn’t all that great.
It doesn’t cover everything you need it to cover. It’s beholden to the whims of the employers who provide it. It’s expensive for the self-employed who purchase it on their own. It prioritizes profit over care, yet still never seems to get the billing done right.
As Sen. Elizabeth Warren said at a debate last year, “Let’s be clear: I’ve never actually met anybody who likes their health insurance company.”
So fine. Refuse to offer health-insurance plans that cover birth control, if you must. I’m not happy about it, especially as I write this an hour before an appointment with my OBGYN to talk about birth control and endometriosis.
But I won’t fight you either, because I think you’ve done my fighting for me — I can think of no better argument for Medicare for All than the freeing of the noble employer from the dreadful moral quandary of birth control.
Great job, team. Drinks are on Justice Brett Kavanaugh.
Sophia Paslaski is on the staff of the Institute for Policy Studies.
Julie Appleby: Whither hospital-at-home services after pandemic?
After seven days as an inpatient for complications related to heart problems, Glenn Shanoski was initially hesitant when doctors suggested in early April that he could cut his hospital stay short and recover at home — with high-tech 24-hour monitoring and daily visits from medical teams.
But Shanoski, a 52-year-old electrician in Salem, Mass., decided to give it a try. He’d felt increasingly lonely in a hospital where the COVID-19 pandemic meant no visitors. Also, Boston’s Tufts Medical Center wanted to free up beds for a possible surge of the coronavirus.
With a push from COVID-19, such “hospital-at-home” programs and other remote technologies — from online visits with doctors to virtual physical therapy to home oxygen monitoring — have been rapidly rolled out and, often, embraced.
As remote visits quickly ramped up, Medicare and many private insurers, which previously had limited telehealth coverage, temporarily relaxed payment rules, allowing what has been an organic experiment to proceed.
“This is a once-in-a-lifetime thing,” said Preeti Raghavan, an associate professor of physical medicine and rehabilitation and neurology at Johns Hopkins University School of Medicine, in Baltimore. “It usually takes a long time — 17 years — for an idea to become accepted and deployed and reimbursed in medical practice.”
Physical therapists traded some hands-on care for video-game-like rehabilitation programs patients can do on home computer screens. And hospitals like Tufts, where Shanoski was a patient, sped up preexisting plans for hospital-at-home initiatives. Doctors and patients were often enthusiastic about the results.
“It’s a great program,” said Shanoski, now fully recovered after 11 days of receiving this care. At home, he could talk with his fiancée “and walk around and be with my dogs.”
But what will remain of these innovations in the post-COVID era is now the million-dollar question. There is a need to assess what is gained — or lost — when a service is delivered remotely. Another variable is whether insurers, which currently reimburse virtual visits at the same rate as if they were in person, will continue to do so. If not, what is a proper amount?
It remains to be seen what types of novel remote care will persist from this born-of-necessity experiment.
Said Glenn Melnick, a health-care economist at the University of Southern California who studies hospital systems: “Pieces of it will, but we have to figure out which ones.”
Hospital At Home
Long established in parts of Australia, England, Italy and Spain, such remote programs for hospital care have not caught on here, in large part because U.S. hospitals make money by filling beds.
Hospital-at-home initiatives are offered to stable patients with common diagnoses — like heart failure, pneumonia and kidney infections — who need hospital services that can now be delivered and managed at a distance.
Patients’ homes are temporarily equipped with the necessities, including monitors and communication equipment as well as backup internet and power sources. Care is overseen by health professionals in remote “command centers.”
Medically Home, the private company providing the service for Tufts, sent its own nurses, paramedics and other employees to handle Shanoski’s daily medical care — such as blood tests or consultations via camera with doctors. They inserted an IV and made sure it was working properly during their visits, which often totaled three a day. Even when Medically Home employees were not there, devices monitored Shanoski’s blood pressure and oxygen levels.
For patients transferred from the hospital, like Shanoski, Tufts pays Medically Home a portion of what the hospital receives in payment. For transfers from an emergency room, Medically Home is paid directly by insurers with which it has contracts.
Before the pandemic, at least 20 U.S. health systems had some form of hospital-at-home setup, said Bruce Leff, a professor at Johns Hopkins University School of Medicine who has studied such programs. He said that, for the right patients, they’re just as safe as in-hospital care and can cost 20% to 30% less.
Tele-Rehab?
Glenn Shanoski, a 52-year-old electrician, spent 11 days with hospital-level care at home —– offered by Tufts Medical Center in Boston. Tufts provides daily visits from medical teams to closely monitor patients in their homes. (Courtesy of Glenn Shanoski)
When the coronavirus shut down elective procedures, many physical-therapy offices had to close, too. But a number of patients who had recently had surgery or injuries were at a crucial point in recovery.
Therapists scrambled to set up video capability, while their trade association called insurers and regulators to convince them that remote physical therapy should be covered.
At the end of April, the Centers for Medicare & Medicaid Services added remote physical, speech and occupational therapy to the list of medical services it would cover during the pandemic. Just as it had done for other services, the agency said payment would be the same as for an in-person visit.
Though some patient care cannot be done virtually, such as hands-on manipulation of tight muscles, the doctors discovered many advantages: “When you see them in their home, you can see exactly their situation. Rugs lying around on the floor. What hazards are in the environment, what support systems they have,” said Raghavan, the rehabilitation physician at Johns Hopkins. “We can understand their context.”
Using video links, therapists can assess how a patient moves or walks, for example, or demonstrate home exercises. There are also specially designed video-game programs — similar to Nintendo Wii — that utilize motion sensors to help rehabilitation patients improve balance or specific skills.
“Tele-rehab was very much in the research phase and wasn’t deployed on a wide scale,” Raghavan said. Her department now does 9 out of 10 visits remotely, up from zero before March.
Pneumonia Monitoring
Even before the coronavirus emergency, some patients with mild pneumonia were treated as outpatients.
Now, with hospitals busy with COVID-19 cases and patients eager to minimize unneeded exposure, more physicians are considering this option and for sicker patients. The key is using a small device called a pulse oximeter, which clips onto the end of a finger and measures heart rate, while also estimating the proportion of oxygen in the blood. Costing at most a few hundred dollars, and long common in doctors’ offices, clinics and emergency rooms, the tiny machine can be sent home with patients or purchased online.
“We do it on a case-by-case basis,” said Dr. Gary LeRoy, president of the American Academy of Family Physicians. It’s a good option for relatively healthy patients but is not appropriate for those with underlying conditions that could lead them to deteriorate rapidly, such as heart or lung disease or diabetes, he said.
A pulse oximeter reading of 95% to 100% is considered normal. Generally, LeRoy tells patients to call his office if their readings fall below 90%, or if they have symptoms like fever, chills, confusion, increasing cough or fatigue and their levels are in the 91-to-94 range. That could signal a deterioration that requires further assessment and possibly hospitalization.
“Having a personal physician involved in the process is critically important because you need to know the nuances” of the patient’s history, he said.
What It All Looks Like In The Future
Virtual therapy requires patients or their caregivers to accept more responsibility for maintaining the treatment regimen, and also for activities like bathing and taking medicines. In return, patients get the convenience of being at home.
But the biggest wild card in whether current innovations persist may be how generously insurers decide to cover them. If insurers decide to reimburse telehealth at far less than an in-person visit, that “will have a huge impact on continued use,” said Mike Seel, vice president of the consulting firm Freed Associates in California. A related issue is whether insurers will allow patients’ primary caregivers to deliver treatment remotely or require outsourcing to a distant telehealth service, which might leave patients feeling less satisfied.
The industry’s lobbying group, America’s Health Insurance Plans, said the ongoing crisis has shown that telehealth works. But it offered no specifics on future reimbursement, other than encouraging insurers to “closely collaborate” with local care providers.
Whether virtual therapy is cost-effective “remains to be seen,” said USC’s Melnick. And it depends on perspective: It may be cheaper for a hospital to do a virtual physical therapy session, but the patient might not see any savings if insurance doesn’t reduce the out-of-pocket cost.
Julie Appleby is a Kaiser Health News reporter.jappleby@kff.org, @Julie_Appleby
Victoria Knight: Anti-Trump claims on alleged Medicare cuts are mostly wrong
Priorities USA Action, a Democratic super PAC, announced a new digital and TV ad series criticizing President Donald Trump’s response to the coronavirus pandemic.
Among the ads is a 15-second spot, titled “Pause,” that alleges Trump is trying to cut Medicare during the global health emergency.
“Our lives are on pause. We’re worried about our health. So why is Trump still trying to cut our Medicare? $451 billion in cuts in the middle of a deadly pandemic. Trump is putting us at risk,” the commercial’s narrator says.
The PAC, which was formed in 2011 to support President Obama’s re-election campaign, has been tapped by Joe Biden, the presumptive Democratic presidential nominee, as his preferred choice among Democratic super PACS for big-donor giving.
This ad caught our attention for two reasons. First, the term “Medicare cuts” has long been volleyed between both Republicans and Democrats in Congress and the White House — and often has proven to be a powerful political tool.
Second, the connection between “cuts” to Medicare and the coronavirus pandemic was a new concept we wanted to explore.
We reached out to Priorities USA Action to ask for the basis of these statements.
Josh Schwerin, a PAC spokesperson, sent us links to news articles and confirmed that the “$451 billion in cuts” referred to Trump’s 2021 proposed budget for Medicare.
Asked to pinpoint where the $451 billion came from, Schwerin pointed us to a February ABC News article that said the president’s budget plan would “whack away at federal spending on health care over the next 10 years … including $451 billion less spent on Medicare.” He also sent us links to a February Washington Blade article and February press release from Rep. Jahana Hayes (D-Conn.) — both of which also cited that figure.
Cuts Or A Reduction In Spending Increases?
In fall 2010, a few months after the Affordable Care Act was enacted, Republicans aired midterm campaign ads attacking Democrats for “cutting” or “gutting” Medicare. The reason was the law included a $500 billion reduction in projected spending for Medicare over 10 years, which would be used to help fund the ACA.
The Obama administration said the reductions in spending would come from lowering payments to Medicare Advantage plans and providers and would not affect the level of care that Medicare beneficiaries received. They also said it would help make the Medicare system more financially stable.
Now, almost 10 years later, Democrats are using the same language to criticize the White House’s long-term plan for Medicare spending.
“‘Cuts’ is a term that has been thrown around for many years,” said Tricia Neuman, executive director of the Program on Medicare Policy at the Kaiser Family Foundation. “This is a semantic issue that often gets politicized, often in an election year.” (Kaiser Health News is an editorially independent program of the foundation.)
Neuman explained that what is being considered here is a reduction in the projected increase in spending over a certain period. This reduction is based on estimates of how much the government is projected to spend on programs — factoring in proposed policy changes — for the following 10 years, taking into account current levels of spending, assumptions about economic growth and trends in the use of Medicare coverage, said Neuman.
Trump’s 2021 budget blueprint for Medicare estimated that spending would increase each of the 10 years. But the estimate also suggested that the administration’s proposed policy changes would reduce the spending increase compared with estimates of what would be spent if the changes were not implemented.
“Let’s say Medicare spends $100 in 2020 and is projected to spend $200 in 2021,” Neuman said. “If the budget said we’re going to reduce the growth in spending by $25, that’s a reduction in an increase. But other people might call that a cut.”
SOURCES:
ABC News, “3 Things to Know About Trump’s Budget Plan for Medicare, Medicaid,” Feb. 11, 2020
Centers for Disease Control and Prevention, “First Travel-Related Case of 2019 Novel Coronavirus Detected in the United States,” Jan. 21, 2020
Centers for Disease Control and Prevention, “CDC Confirms 13th Case of 2019 Novel Coronavirus,” Feb. 10, 2020
Center on Budget and Policy Priorities, “Medicare in the 2021 Trump Budget,” Feb. 13, 2020
Committee for a Responsible Federal Budget, “The President’s Budget Saves Medicare $600 Billion While Reducing Out-of-Pocket Costs,” Feb. 10, 2020
Commonwealth Fund, “That $716 Billion Medicare Cut: One Number, Three Competing Visions,” Aug. 16, 2012
Congressional Budget Office, “Proposals Affecting Medicare — CBO’s Estimate of the President’s Fiscal Year 2021 Budget,” March 25, 2020
Rep. Jahana Hayes press release, “Rep Hayes Condemns Trump Administration’s Proposed Cuts to Health Care, Social Security, SNAP, and Education Funding,” Feb. 13, 2020
CNN, “February 10 Coronavirus News,” Feb. 10, 2020
Email exchange with Josh Schwerin, senior strategist and director of communications, Priorities USA, May 21, 2020
FactCheck.Org, “Competing Claims on Trump’s Budget and Seniors,” Feb. 18, 2020
The New York Times, “How the Coronavirus Pandemic Unfolded: a Timeline,” May 26, 2020
Office of Management and Budget, “A Budget for America’s Future,” Feb. 10, 2020
Phone interview with Marc Goldwein, senior policy director, Committee for a Responsible Federal Budget, May 22, 2020
Phone interview with Tricia Neuman, executive director of the Program on Medicare Policy, Kaiser Family Foundation, May 22, 2020
Phone interview with Joseph Antos, scholar in health care and retirement policy, American Enterprise Institute, May 21, 2020
Phone interview with Paul N. Van de Water, senior fellow, Center on Budget and Policy Priorities, May 22, 2020
PolitiFact, “‘Honest Ad’ Mostly Wrong About Trump, Taxes and Medicare,” July 26, 2019
PolitiFact, “Republican Exaggerations About Cutting Medicare,” Oct. 11, 2010
Priorities USA, “Pause – Medicare” ad, May 19, 2020
Priorities USA, “Priorities USA Action Launches New TV and Digital Ads Linking Coronavirus Devastation to Trump’s Failure to Lead on Response,” May 19, 2020
Speaker of the House Nancy Pelosi Newsroom, “Pelosi Statement on Trump Budget Summary,” Feb. 9, 2020
The Washington Blade, “Trump’s Budget Seeks Increased HIV Funds — But Housing, Global Programs Cut,” Feb. 12, 2020
The Wall Street Journal, “Biden Campaign Indicates Priorities USA Is Preferred Super PAC,” April 15, 2020
The Washington Post, “Democrats Engage in ‘Mediscare Spin’ on the Trump Budget,” March 15, 2019
The Washington Post, “What Trump Proposed in His 2021 Budget,” Feb. 10, 2020
World Health Organization, “Statement on the Second Meeting of the International Health Regulations (2005) Emergency Committee Regarding the Outbreak of Novel Coronavirus (2019-nCoV),” Jan. 30, 2020
World Health Organization, “WHO Announces COVID-19 Outbreak a Pandemic,” March 12, 2020
The Number Itself And What It Means
We reached out to the Department of Health and Human Services, which oversees Medicare, for its take on that $451 billion figure but have not heard back.
Marc Goldwein, senior policy director for the nonpartisan Committee for a Responsible Federal Budget, said the actual figure could be anywhere from $400 billion to $600 billion, depending on how calculations are done. His analysis relied on the executive branch’s Office of Management and Budget calculations and landed on a figure close to $505 billion. Other variables, such as “likely savings from drug price reform” — yet to be enacted — move it closer to $600 billion.
The left-leaning Center on Budget and Policy Priorities came up with a similar estimate: $501 billion. The Congressional Budget Office’s estimate, not including savings generated from proposed drug pricing reforms, was closer to $400 billion.
In all cases, though, the reductions in Medicare spending would be achieved through proposals such as lowering payments to providers and paying the same amount for the same health service offered in different settings.
Goldwein said these proposals for Medicare reform are largely bipartisan and “either mimic or build upon” those advanced during the Obama era. He also said that, in his organization’s view, the “cuts” are savings to the Medicare program and beneficiaries, who would see lower premiums and out-of-pocket medical costs.
The policy experts said it’s likely the reductions in spending wouldn’t directly affect the care that Medicare beneficiaries receive. But provider groups have complained that lower reimbursements might drive some doctors to leave Medicare. Hospitals have argued against the proposal for equalizing payments for similar services because they say their overhead expenses are higher than those of a doctor’s office or off-site clinic and their higher rates help finance other necessary services.
Timing Matters
The Priorities USA Action ad also alleges that Trump is trying to cut Medicare “in the middle of a deadly pandemic.” But the timeline of events doesn’t support this statement.
The White House released the 2021 budget proposal on Feb. 10 — well before the COVID-19 outbreak had become a part of our national consciousness.
The first domestic case of COVID-19 was announced by the Centers for Disease Control and Prevention on Jan. 21. The World Health Organization declared the outbreak of the novel coronavirus a “public health emergency of international concern” on Jan. 30.
On Feb. 10, the day the budget was released, the CDC put out a press release stating there were 13 cases of the disease in the U.S. CNN also published an article that day stating the vast majority of COVID-19 cases and deaths had occurred in China. Authorities didn’t announce the first U.S. death from COVID-19 until Feb. 29. The WHO declared a pandemic on March 11.
“These budget proposals were probably developed well before the pandemic hit the U.S. and hit it hard,” said Neuman. However, she added, “the administration hasn’t disavowed these proposals, but they also haven’t pushed them forward.”
Joseph Antos, a scholar in health care and retirement policy at the right-leaning American Enterprise Institute, said it was a “ridiculous statement to connect cutting Medicare spending to the COVID crisis.”
“The implication of the video that this is going on actively while we’re in the middle of this crisis, that’s dead wrong,” said Antos.
Our Ruling
The Priorities ad said Trump is trying to make $451 billion in Medicare cuts “in the middle of a deadly pandemic.”
This is an exaggerated attack, even before the pandemic is layered on top of it. The dollar figure itself is “in the ballpark” of what the policy proposals would generate in spending reductions, giving this ad a sliver of truth. However, in the Trump budget, the amount is spread over 10 years — important context that was omitted.
What’s in Trump’s budget proposal is not a direct cut to Medicare. Instead, Priorities uses the age-old political tactic — employed on both sides of the aisle — of holding up a reduction in projected spending growth as a “cut.”
Moreover, the ad leaves the impression that Trump is trying to whack Medicare for seniors at a time when panic is particularly high because of the coronavirus. But that connection to the pandemic is also misleading. The presidential budget was released weeks before most of the nation began to comprehend the threat of COVID-19.
The claim contains an element of truth but ignores critical facts and context that would give a different impression. We rate it Mostly False.
Victoria Knight: vknight@kff.org, @victoriaregisk
Shefali Luthra: How insurers sank plan for 'public option' in Connecticut
Headquarters of the huge insurance company Cigna in Bloomfield, Conn
Health-care costs were rising. People couldn’t afford coverage. So, in Connecticut, state lawmakers took action.
Their solution was to attempt to create a public health insurance option, managed by the state, which would ostensibly serve as a low-cost alternative for people who couldn’t afford private plans.
Immediately, an aggressive industry mobilized to kill the idea. Despite months of lobbying, debate and organizing, the proposal was dead on arrival.
“That bill was met with a steam train of opposition,” recalled state Rep. Sean Scanlon, who chairs the legislature’s insurance and real estate committee.
Through a string of presidential debates, the idea of a public option was championed by moderate Democrats ― such as former South Bend, Ind., Mayor Pete Buttigieg, Minnesota Sen. Amy Klobuchar and former Vice President Joe Biden ― as an alternative to a single-payer “Medicare for All” model. Those center-left candidates again touted the idea during the Feb. 25 Democratic debate in South Carolina, with Buttigieg arguing such an approach would deliver universal care without the political baggage. (Buttigieg and Klobuchar have since ended their presidential bids.)
The public option has a common-sense appeal for many Americans who list health-care costs as a top political concern: If the market doesn’t offer patients an affordable health care insurance they like, why not give them the option to buy into a government-run health plan?
But the stunning 2019 defeat of a plan to implement such a policy in Connecticut — a solidly blue, or liberal-leaning, state — shows how difficult it may be to enact even “moderate” solutions that threaten some of America’s most powerful and lucrative industries. The health-insurance industry’s fear: If the average American could weigh a public option — Medicare or Medicaid or some amalgam of the two — against commercial plans on the market, they might find the latter wanting.
That fear has long blocked political action, said Colleen Grogan, a professor at the University of Chicago’s School of Social Service Administration, because “insurance companies are at the table” when health care reform legislation gets proposed.
To be sure, the state calculus is different from what a federal one would be. In the statehouse, a single industry can have an outsize influence and legislators are more skittish about job loss. In Connecticut, that was an especially potent force. Cigna and Aetna are among the state’s top 10 employers.
“They became aware of the bill, and they moved immediately to kill it,” said Frances Padilla, who heads the Universal Health Care Foundation of Connecticut and worked to generate support for the public option.
And those strategies have been replicated at the national level as a national coalition of health industry players ramps up lobbying against Democratic proposals. Beyond insurance, health-care systems and hospitals have joined in mobilizing against both public option and single-payer proposals, for fear a government-backed plan would pay far less than the rates of commercial insurance.
Many states are exploring implementing a public option, and once one is successful, others may well follow, opening the door to a federal program.
“State action is always a precursor for federal action,” said Trish Riley, the executive director of the National Academy for State Health Policy. “There’s a long history of that.”
Virginia state delegate Ibraheem Samirah introduced a new public option bill this session. In Colorado, Gov. Jared Polis is spearheading an effort. And Washington state is the furthest along — it approved a public option last year, and the state-offered plan will be available next year.
But in 2019, Connecticut’s legislators were stuck between two diametrically opposed constituencies, both distinctly local.
Health costs had skyrocketed. Across the state, Scanlon said, small-business owners worried that the high price of insurance was squeezing their margins. A state-provided health plan, the logic went, would be highly regulated and offer lower premiums and stable benefits, providing a viable, affordable alternative to businesses and individuals. (It could also pressure private insurance to offer cheaper plans.)
A coalition of state legislators came together around a proposal: Let small businesses and individuals buy into the state employee health benefit plan. Insurers’ response was swift.
Lobbyists from the insurance industry swarmed the Capitol, recalled Kevin Lembo, the state comptroller. “There was a lot of pressure put on the legislature and governor’s office not to do this.”
State ethics filings make it impossible to tease out how much of Aetna and Cigna’s lobbying dollars were spent on the public option legislation specifically. In the 2019-20 period, Aetna spent almost $158,000 in total lobbying: $93,000 lobbying the Statehouse, and $65,000 on the governor’s office. Cigna spent about $157,000: $84,000 went to the legislature, and $73,000 to the executive.
Anthem, another large insurance company, spent almost $147,000 lobbying during that same period — $23,545 to the governor, and $123,045 to the legislature. Padilla recalled that Anthem also made its opposition clear, though it was less vocal than the other companies. (Anthem did not respond to requests for comment.)
A coalition of insurance companies and business trade groups rolled out an online campaign, commissioning reports and promoting op-eds that argued the state proposal would devastate the local economy.
Lawmakers also received scores of similarly worded emails from Cigna and Aetna employees, voicing concern that a public option would eliminate their jobs, according to documents shared with Kaiser Health News. Cigna declined to comment on those emails, and Aetna never responded to requests for comment.
Connecticut’s first public option bill — which would let people directly buy into the publicly run state employee health plan ― flamed out.
So lawmakers put forth a compromise proposal: The state would contract with private plans to administer the government health option, allowing insurance companies to participate in the system.
The night before voting, that too fell apart. Accounts of what happened vary.
Some say Cigna threatened to pull its business out of the state if a public option were implemented. Publicly, Cigna has said it never issued such a threat but made clear that a public option would harm its bottom line. The company would not elaborate when contacted by KHN.
Now, months later, both Scanlon and Lembo said another attempt is in the works, pegged to legislation resembling last year’s compromise bill. But state lawmakers work only from February through early May, which is not a lot of time for a major bill.
Meanwhile, other states are making similar pushes, fighting their own uphill battles.
“It really depends on whether there are other countervailing pressures in the state that allow politicians to be able to go for a public option,” Grogan said.
And, nationally, if a public option appears to gain national traction, Blendon said, insurance companies “are clearly going to battle.”
They’re going to go after every Republican, every moderate Democrat, to try to say that … it’s a backdoor way to have the government take over insurance,” he said.
Still, when President Barack first proposed the idea of a public option as part of the Affordable Care Act, it was put aside as too radical. Less than a decade later, support for the idea ― every Democratic candidate backs either an optional public health plan or Medicare for All ― is stronger than it ever has been.
So strong, Grogan said, that it is hard for people to understand “the true extent” of the resistance that must be overcome to realize such a plan.
But in Connecticut, politicians say they’re up for a new battle in 2020.
“We can’t accept the status quo. … People are literally dying and going bankrupt,” Scanlon said. “A public option at the state level is the leading fight we can be taking.”
Shefali Luthra is a Kaiser Health News reporter.
Phil Galewitz: Trump's Medicaid chief mostly wrong on its outcomes, access
“This wouldn’t pass muster in a first-year statistics class.’’
— Benjamin Sommers, health-care economist at Harvard, of Medicare-Medicaid chief’s remarks
The Trump administration’s top Medicaid official has been increasingly critical of the entitlement program she has overseen for three years.
Seema Verma, administrator of the Centers for Medicare & Medicaid Services, has warned that the federal government and states need to better control spending and improve care to the 70 million people on Medicaid, the state-federal health insurance program for the low-income population. She supports changes to Medicaid that would give states the option to receive capped annual federal funding for some enrollees instead of open-ended payouts based on enrollment and health costs. This would be a departure from how the program has operated since it began in 1965.
In an early February speech to the American Medical Association, Verma noted how changes are needed because Medicaid is one of the top two biggest expenses for states, and its costs are expected to increase 500% by 2050.
“Yet, for all that spending, health outcomes today on Medicaid are mediocre and many patients have difficulty accessing care,” she said.
Verma’s sharp comments got us wondering if Medicaid recipients were as bad off as she said. So we asked CMS what evidence it has to back up her views.
A CMS spokesperson responded by pointing us to a CMS fact sheet comparing the health status of people on Medicaid to people with private insurance and Medicare. The fact sheet, among other things, showed 43% of Medicaid enrollees report their health as excellent or very good compared with 71% of people with private insurance, 14% on Medicare and 58% who were uninsured.
The spokesperson also pointed to a 2017 report by the Medicaid and CHIP Payment and Access Commission (MACPAC), a congressional advisory board, that noted: “Medicaid enrollees have more difficulty than low-income privately insured individuals in finding a doctor who accepts their insurance and making an appointment; Medicaid enrollees also have more difficulty finding a specialist physician who will treat them.”
We opted to look at those issues separately.
What About Health Status?
Several national Medicaid experts said Verma is wrong to use health status as a proxy for whether Medicaid helps improve health for people. That’s because to be eligible for Medicaid, people must fall into a low income bracket, which can impact their health in many ways. For example, they may live in substandard housing or not get proper nutrition and exercise. In addition, lack of transportation or child care responsibilities can hamper their ability to visit doctors.
Benjamin Sommers, a health economist at Harvard University, said Verma’s comparison of the health status of Medicaid recipients against people with Medicare or private insurance is invalid because the populations are so different and face varied health risks. “This wouldn’t pass muster in a first-year statistics class,” he said.
Death rates, for example, are higher among people in the Medicare program than those in private insurance or Medicaid, he said, but that’s not a knock on Medicare. It’s because Medicare primarily covers people 65 and older.
By definition, Medicaid covers the most vulnerable people in the community, from newborns to the disabled and the poor, said Rachel Nuzum, a vice president with the nonpartisan Commonwealth Fund. “The Medicaid population does not look like the privately insured population.”
Joe Antos, a health economist with the conservative American Enterprise Institute, also agreed, saying he is leery of any studies or statements that evaluate Medicaid without adjusting for risk.
For a better mechanism to gauge health outcomes under Medicaid, experts point to dozens of studies that track what happened in states that chose in the past six years to pursue the Affordable Care Act’s Medicaid expansion. The health law gave states the option to extend Medicaid to everyone with incomes up to 138% of the federal poverty level, or about $17,600 annually for an individual. Thirty-six states and the District of Columbia have adopted the expansion.
“Most research demonstrates that Medicaid expansion has improved access to care, utilization of services, the affordability of care, and financial security among the low-income population,” concluded the Kaiser Family Foundation in summarizing findings from more than 300 studies. “Studies show improved self-reported health following expansion and an association between expansion and certain positive health outcomes.” (Kaiser Health News is an editorially independent program of the foundation.)
Studies found the expansion of Medicaid led to lower mortality rates for people with heart disease and among end-stage renal disease patients initiating dialysis.
Researchers also reported that Medicaid expansion was associated with declines in the length of stay of hospitalized patients. One study found a link between expansion and declines in mechanical ventilation rates among patients hospitalized for various conditions.
Another recent study compared the health characteristics of low-income residents of Texas, which has not expanded Medicaid, and those of Arkansas and Kentucky, which did. It found that new Medicaid enrollees in the latter two states were 41 percentage points more likely to have a usual source of care and 23 percentage points more likely to say they were in excellent health than a comparable group of Texas residents.
Medicaid’s benefits, though, affect far more than the millions of nondisabled adults who gained coverage as a result of the ACA. “Medicaid coverage was associated with a range of positive health behaviors and outcomes, including increased access to care; improved self-reported health status; higher rates of preventive health screenings; lower likelihood of delaying care because of costs; decreased hospital and emergency department utilization; and decreased infant, child, and adult mortality rates,” according to a report issued this month by the nonpartisan Robert Wood Johnson Foundation.
Children — who make up nearly half of Medicaid enrollees — have also benefited from the coverage, studies find. Some studies report that Medicaid contributes to improved health outcomes, including reductions in avoidable hospitalizations and lower child mortality.
Research shows people on Medicaid are generally happy with the coverage.
A Commonwealth Fund survey found 90% of adults with Medicaid were satisfied or very satisfied with their coverage, a slightly higher percentage than those with employer coverage.
Accessible Care?
The evidence here is less emphatic.
A 2017 study published in JAMA Internal Medicine found 84% of Medicaid recipients felt they were able to get all the medical care they needed in the previous six months. Only 3% said they could not get care because of long wait times or because doctors would not accept their insurance.
Verma cites a 2017 MACPAC report that noted some people on Medicaid have issues accessing care. But that report also noted: “The body of work to date by MACPAC and others shows that Medicaid beneficiaries have much better access to care, and much higher health care utilization, than individuals without insurance, particularly when controlling for socioeconomic characteristics and health status.” It also notes that “Medicaid beneficiaries also fare as well as or better than individuals with private insurance on some access measures.”
The report said people with Medicaid are as likely as those with private insurance to have a usual source of care, a doctor visit each year and certain services such as a Pap test to detect cervical cancer.
“Medicaid is not great coverage, but it does open the door for health access to help people deal with medical problems before they become acute,” Antos said.
On the negative side, the report said Medicaid recipients are more likely than privately insured patients to experience longer waiting times to see a doctor. They also are less likely to receive mammograms, colorectal tests and dental visits than the privately insured.
“Compared to having no insurance at all, having Medicaid improves access to care and improves health,” said Rachel Garfield, a vice president at the Kaiser Family Foundation. “There is pretty strong evidence that Medicaid helps patients get the care they need.”
Our Ruling
Verma said that “health outcomes today on Medicaid are mediocre and many patients have difficulty accessing care.”
Numerous studies show people’s health improves as a result of Medicaid coverage. This includes lower mortality rates, shorter hospital stays and more people likely to get cancer screenings.
While it’s hard to specify what “many patients having difficulty accessing care” means, research does show that Medicaid enrollees generally say they have no trouble accessing care most of the time.
We rate the claim as Mostly False.
Phil Galewitz is a Kaiser Health News reporter.
Phil Galewitz: pgalewitz@kff.org, @philgalewitz
Judith Graham: What to do if your home health-care agency ditches you
Craig Holly, of Connecticut, was determined to fight when the home health agency caring for his wife decided to cut off services Jan. 18.
The reason he was given by an agency nurse? His wife was disabled but stable, and Medicare was changing its payment system for home health.
Euphrosyne “Effie” Costas-Holly, 67, has advanced multiple sclerosis. She can’t walk or stand and relies on an overhead lift system to move from room to room in their house.
Effie wasn’t receiving a lot of care: just two visits every week from aides who gave her a bath, and one visit every two weeks from a nurse who evaluated her and changed her suprapubic catheter, a device that drains urine from a tube inserted in the abdomen.
But even that little bit helped. Holly, 71, has a bad back and is responsible for his wife’s needs 24/7. Her urologist didn’t have a lift system in his office and had told the couple it was safer to have Effie’s catheter changed regularly at home.
Holly wasn’t sure what to do. Call his congressman and lodge a complaint? Write a letter to the director of the home health agency owned and operated by Hartford HealthCare Corp., one of the largest health care systems in Connecticut?
Things snapped into focus when Holly attended a late November presentation about Medicare’s home health services by Kathleen Holt, associate director of the Center for Medicare Advocacy.
If you’re told Medicare’s home health benefits have changed, don’t believe it: Coverage rules haven’t been altered and people are still entitled to the same types of services, Holt told the group. (For a complete description of Medicare’s home health benefit, click here.)
All that has changed is how Medicare pays agencies under a new system known as the Patient-Driven Groupings Model (PDGM). This system applies to home health services for older adults with original Medicare. Managed-care-style Medicare Advantage plans, which serve about one-third of Medicare beneficiaries, have their own rules.
Under PDGM, agencies are paid higher rates for patients who need complex nursing care and less for people with long-term chronic conditions who need physical, occupational or speech therapy.
Holly got lucky. When he reached out to Holt, she suggested points to bring up with the agency. Tell them your wife’s urologist wasn’t consulted about a possible discharge from home health, doesn’t agree with this move and is willing to recertify Effie for ongoing home health services, Holt advised.
Within hours, the agency reversed its decision and said Effie’s services would remain in place.
A Hartford HealthCare spokesman said he couldn’t comment on the situation, citing privacy laws. “Our goal is to continue to provide the right care at the right place at the right time with the orders reflecting the specific treatment goals and medical needs of each patient,” he wrote in an email.
“No patients have had services reduced as a result of Medicare’s implementation of the PDGM program.”
But therapists, home health agencies and association leaders say that patients across the country are being told they no longer qualify for certain services (such as vitamin B12 injections or suprapubic catheter changes) or that services have to be cut back or discontinued.
What should you do if this happens to you? Experts have several suggestions:
Get as much information as possible. If your agency says you no longer need services, ask your nurse or therapist what criteria you no longer meet, said Jason Falvey, a physical therapist and postdoctoral research fellow in the geriatrics division at Yale School of Medicine, in New Haven.
Does the agency think skilled services are no longer necessary and that a family member can now provide all needed care? Does it believe the person receiving care is no longer homebound? (To receive Medicare home health services, a person must be homebound and in need of intermittent skilled nursing or therapy services.)
“If the therapist or the agency says that Medicare doesn’t cover a particular service any longer, that should raise red flags because Medicare hasn’t changed its benefits or clinical criteria for home health coverage,” Falvey said.
Enlist your doctor’s help. Armed with this information, get in touch with the physician who ordered home health services for you.
“Your physician should be aware if you feel you’re not getting the services you need,” said Kara Gainer, director of regulatory affairs for the American Physical Therapy Association.
“Doctors should not be sitting on the sidelines; they should be advocating for their patients,” said William Dombi, president of the National Association for Home Care and Hospice.
Take it up the chain of command. Meanwhile, let people at the home health agency know that you’re contesting any decision to reduce or terminate services.
When someone begins home health services, an agency is required to give them a sheet, known as the “Patient Bill of Rights,” with the names and phone numbers of people who can be contacted if difficulties arise. Contact the agency’s clinical supervisor, who should be listed here.
“Call us and trigger a conversation,” said Bud Langham, chief strategy and innovation officer at Encompass Health, which provides home health services to 45,000 patients in 33 states.
Also, contact the organization in your state that oversees home health agencies and let them know you believe your agency isn’t following Medicare’s rules, said Sharmila Sandhu, vice president of regulatory affairs for the American Occupational Therapy Association. This should be among the numbers listed on the bills of rights sheet.
Contact Medicare’s ombudsman. Unlike nursing homes, home health agencies don’t have designated long-term ombudsmen who represent patients’ interests. But you can contact 1-800-Medicare and ask a representative to submit an inquiry or complaint to the general Medicare ombudsman, a spokesman for the Centers for Medicare & Medicaid Services said. The ombudsman is tasked with looking into disputes brought to its attention.
File an expedited appeal. If a home health agency plans to discontinue services altogether, staff are required to give you a “Notice of Medicare non-coverage” stating the date on which services will end, the reason for termination and how to file a “fast appeal.” (This notice must be delivered at least two days before services are due to end.) You have to request an expedited appeal by noon of the day after you receive this notice.
A Medicare Quality Improvement Organization will handle the appeal, review your medical information and generally get back to you within three days. In the meantime, your home health agency is obligated to continue providing services.
Shop around. Multiple home health agencies operate in many areas. Some may be for-profit, others not-for-profit.
“All home health agencies are not alike” and if one agency isn’t meeting your needs “consider shopping around,” Dombi said. While this may not be possible in smaller towns or rural areas, in urban areas many choices are typically available.
Contact an advocate. The Center for Medicare Advocacy has been hearing from patients who are being given all kinds of misinformation related to Medicare’s new home health payment system.
Among the things that patients have been told, mistakenly: “Medicare ‘closed a loophole’ as of Jan. 1 so your care will no longer be provided after mid-January,” “Medicare will no longer pay for more than one home health aide per week,” and “We aren’t paid sufficiently to continue your care,” said Judith Stein, the center’s executive director.
Some agencies may not understand the changes that Medicare is implementing; confusion is widespread. Advocates such as the Center for Medicare Advocacy (contact them at here) or the Medicare Rights Center (national help line: 800-333-4114) can help you understand what’s going on and potentially intervene on your behalf.
Judith Graham is a Kaiser Health News journalist.
Llewellyn King: A big Warren weakness -- she always takes the bait
Sen. Elizabeth Warren
The Democratic deep state – it is not made up of Democrats in the bureaucracies, but rather those who make up the core of the party -- is in agony.
Solid, middle-of-the-road, fad-proof Democrats are not happy. They are the ones most likely to have thrown their support early to Joe Biden, and who now are eyeing Elizabeth Warren with apprehension and a sense of the inevitable.
Warren exhibits all the weaknesses of someone who, at her core, is not a professional politician. She blunders into traps whether they are set for her or not. She is vulnerable to the political equivalent of fatal attraction.
Biden lurches from gaffe to gaffe and is haunted by the positions he took a long time ago. Some of his social positions turn out to be like asbestos: decades ago, seen as a cure-all building material, now lethal.
Where Biden stumbles over the issues of the past, Warren walks into the traps of today. She is one of those self-harming politicians who shoots before she takes aim.
When Donald Trump mocked her claims of Native American ancestry, Warren took the bait and ended with a hook in her gullet. A more seasoned politician would not have been goaded by a street fighter into taking a DNA test, resulting in an apology. Ignorance met incaution and Trump won.
Warren also swallowed the impeachment bait of the left, ignoring the caution of centrists who worried about the outcome in an election year. If the Senate acquits, Trump claims exoneration.
Then there is the Medicare for All trap into which Warren not so much fell as she propelled herself. Because Bernie Sanders, who reminds me of King Lear, and his field commander Alexandria Ocasio-Cortez and others on the left favored it, Warren had to leap in, ill-prepared.
The prima facie logic is there, but the mechanism is not. It is easy to see that Medicare is a very popular program that works. It is also easy to see that the United States pays more than twice as much on health care as any other nation.
Those, like myself, who have experienced state systems abroad, as well a Medicare at home, know the virtues of the single-payer system with patient-chosen, private insurance on the top for private hospital rooms, elective surgery and pampering that is not basic medicine. But we also know that the switch to Medicare for All would be hugely dislocating.
Employer-paid health care is a tax on business but substituting that with a straight tax is politically challenging, structurally difficult, and impossible to sell at this stage in the evolution of health care. It likely will give a new Democratic president a constitutional hernia.
Warren seems determined to embrace the one thing that makes the left and its ideas electorally vulnerable: The left wants to tell the electorate what it is going to take away.
Consider this short list of the left’s confiscations which the centrists must negotiate, not endorse: We want your guns, we want your employer-paid health care, we want your gasoline-powered car, and we want the traditional source of your electricity. Trust us, you will love these confiscations.
Those are the position traps for Warren. To make a political sale -- or any sale – do not tell the customers what you are going to take away from them.
It is well known that Republicans roll their eyes in private at the mention of Trump, while supporting him in public. Democratic centrists -- that place where the true soul of a party resides, where its expertise dwells, and where its most thoughtful counsel is to be heard -- roll their eyes at the mention of all the leading candidates. They like Pete Buttigieg but think him unelectable. If elected, they worry that Warren would fall into the traps set for her around the world -- as Trump has with Vladimir Putin, Xi Jinping and Kim Jong-un.
Politics needs passion. “She is better than Trump,” is not a passionate rallying cry.
Llewellyn King is executive producer and host of White House Chronicle, on PBS. His email is llewellynking1@gmail.com and he’s based in Rhode Island and Washington, D.C.
Linda Gasparello
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"White House Chronicle" on PBS
Mobile: (202) 441-2703
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Susan Jaffe: Medicare's frustrating post-hospitalization gap
Incision from knee-replacement surgery
Medicare paid for Betty Gordon’s knee-replacement surgery in March, but the 72-year-old former high school teacher, a Rhode Islander, needed a nursing home stay and care at home to recover.
Yet Medicare wouldn’t pay for that. So Gordon is stuck with a $7,000 bill she can’t afford — and, as if that were not bad enough, she can’t appeal.
The reasons Medicare won’t pay have frustrated her and many others trapped in the maze of regulations surrounding something called “observation care.”
Patients, like Gordon, receive observation care in the hospital when their doctors think they are too sick to go home but not sick enough to be admitted. They stay overnight or longer, usually in regular hospital rooms, getting some of the same services and treatment (often for the same problems) as an admitted patient — intravenous fluids, medications and other treatment, diagnostic tests and round-the-clock care they can get only in a hospital.
After knee-replacement surgery, Betty Gordon needed to go to a nursing home but because she had been in outpatient care and not hospitalized as an admitted patient for three days, Medicare would not cover her care there.
But observation care is considered an outpatient service under Medicare rules, like a doctor’s appointment or a lab test. Observation patients may have to pay a larger share of the hospital bill than if they were officially admitted to the hospital. Plus, they have to pick up the tab for any nursing home care
Medicare’s nursing home benefit is available only to those admitted to the hospital for three consecutive days. Gordon spent three days in the hospital after her surgery, but because she was getting observation care, that time didn’t count.
There’s another twist: Patients might want to file an appeal, as they can with many other Medicare decisions. But that is not allowed if the dispute involves observation care.
Monday, a trial begins in federal court in Hartford, Conn., where patients who were denied Medicare’s nursing home benefit are hoping to force the government to eliminate that exception. A victory would clear the way for appeals from hundreds of thousands of people.
The class-action lawsuit was filed in 2011 by seven Medicare observation patients and their families against the Department of Health and Human Services. Seven more plaintiffs later joined the case.
.“This is about whether the government can take away health care coverage you may be entitled to and leave you no opportunity to fight for it,” said Alice Bers, litigation director at the Center for Medicare Advocacy, one of the groups representing the plaintiffs.=
If they win, people with traditional Medicare who received observation care services for three days or longer since Jan. 1, 2009, could file appeals seeking reimbursement for bills Medicare would have paid had they been admitted to the hospital. More than 1.3 million observation claims meet these criteria for the 10-year period through 2017, according to the most recently available government data.
Gordon is not a plaintiff in the case, but she said the rules forced her to borrow money to pay for the care. “It doesn’t seem fair that after paying for Medicare all these years, you’re told you’re not going to be covered now for nursing home care,” Gordon said.
No one has explained to Gordon, who has hypoglycemia and an immune disease, why she wasn’t admitted. The federal notice hospitals are required to give Medicare observation patients didn’t provide answers.
Even Seema Verma, the head of the Centers for Medicare & Medicaid Services, is puzzled by the policy. “Better be admitted for at least 3 days in the hospital first if you want the nursing home paid for,” she said in a tweet Aug. 4. “Govt doesn’t always make sense. We’re listening to feedback.” Her office declined to provide further explanation.
Patients and their families can try to persuade the physician or hospital administrators to change their status, and sometimes that strategy works. If not, they can leave the hospital to avoid the extra expenses, even if doing so is against medical advice
The requirement of three consecutive days as a hospital inpatient to qualify for nursing home coverage is written into the Medicare law. But there are exemptions. Medicare officials don’t apply it to beneficiaries in some pilot programs and allow private Medicare Advantage insurers to waive it for their patients.
Concerned about the growing number of people affected by observation care, Medicare officials created a “two-midnight” rule in 2013. If a doctor expects a patient will be sick enough to stay in the hospital through two midnights, then it says the patient should generally be admitted as an inpatient
Yet observation claims have increased by about 70 percent since 2008, to more than 2 million in 2017. Claims for observation care patients who stay in the hospital for longer than 48 hours — who likely would qualify for nursing home coverage had they been admitted —rose by nearly 159%, according to data Kaiser Health News obtained from CMS. Yet the overall growth in traditional Medicare enrollment was just under 9 percent.
Justice Department lawyers handling the case declined to be interviewed, but in court filings they argue that the lawsuit accuses the wrong culprit.
The government can’t be blamed, the lawyers said, because the “two-midnight” rule gives hospitals and doctors — not the government — the final word on whether a patient should be admitted.
The government’s lawyers argue that since Medicare “has not established any fixed or objective criteria for inpatient admission,” any decision to admit a patient is not “fairly traceable” to the government.
Like Gordon, some doctors also complain about observation care rules. An American Medical Association spokesman, who spoke on condition of not being named, said the “two-midnight” policy “is challenging and illogical” and should be rescinded. “CMS should instead rely on physicians’ clinical judgment to determine a patient’s inpatient or outpatient status,” he added.
HHS’s Office of Inspector General urged CMS to count observation care days toward the three-day minimum needed for nursing home coverage. It’s No. 1 on a list issued last month of the 25 most important inspector general’s recommendations the agency has failed to implement.
The Medicare Payment Advisory Commission, which counsels Congress, has made a similar suggestion.
However, Colin Milligan, a spokesman for the American Hospital Association, is more positive about the “two-midnight” rule. It “recognizes the important role of physician judgment,” he said.
Medicare isn’t dictating what physicians must do, said a physician who has researched the effects of observation care. “It’s a benchmark upon which to base your decisions, not a standard or a mandate,” said Dr. Michael Ross, a professor of emergency medicine at Emory University School of Medicine in Atlanta. He supervises observation care units at Emory’s five hospitals and was chairman of a CMS advisory subcommittee on observation care.
Other physicians claim that since HHS pays hospitals and doctors to treat Medicare patients, the agency’s policies weigh on their decisions.
“One of the hardest things to do is to get physicians to predict what will happen with patients — we like to hedge our bets and account for all possibilities,” said Dr. Tipu Puri, a physician adviser and medical director at the University of Chicago’s medical center. “But we’re being forced to interpret the rules and read between the lines.”
In the meantime, observation care patients who get follow-up care at a nursing home may soon receive a puzzling notice. A Medicare fact sheet issued last month “strongly encourages” nursing home operators to give an “advance beneficiary notice of non-coverage” to patients who arrive without the required prior three-day hospital admission.
But that notice says they can choose to seek reimbursement by submitting an appeal to Medicare — an option government lawyers will argue in court is impossible.
Susan Jaffe is a Kaiser Health News reporter. Jaffe.KHN@gmail.com, @SusanJaffe
Llewellyn King: Trump grabs U.K. third rail, then lets go fast
American conservatives hate it. Even the most passionate British conservatives support it. It was conceived by Winston Churchill as far back as 1908, mentioned again in 1924, and laid out as a plank for British reconstruction in his forward-looking “Plan for Postwar Britain” in 1943.
This toxic issue, which turns red blue and blue red when you cross the Atlantic, is Britain’s National Health Service (NHS).
Introduced in 1948 by the Labor Government of Clement Atlee, it is often thought of in the United States as a socialist idea. Churchill was, in fact, influenced greatly by William Beveridge, a liberal economist who played a key role in the formation of what came to be known as the welfare state, which combined national insurance (social security) with national health insurance.
The Brits, I can attest as a former Brit, love the NHS. They also love to criticize it. It is up there with the weather.
Also, it should be noted, the NHS is not perfect; it is and always will be a work in progress.
So large a system has its failures. Whenever there is one, conservative American friends are quick to send me the bad news -- as though a surgical mess-up in Birmingham was a harbinger of the collapse of the entire system.
The NHS has been described as the third rail of British politics.
Clearly, President Trump had never heard that and had the temerity to suggest that the NHS should be part of trade negotiations between the United States and Britain. No, a thousand times no, was the instant reaction of the conservative ministers and former ministers now jostling for election as prime minister.
Any suggestion that the NHS -- Britain’s most popular government program -- would be in any way subject to commercial interference would doom a British candidate for public office.
How it was that Trump thought he could grab the third rail and get away with it is unknown, but he walked that one back, as they say nowadays, quickly the next day.
Over the years, I have been asked innumerable times about how the Brits do things from public transport to creative theater; from the financing of the BBC to the hobby of racing pigeons. When it comes to the NHS I am never asked; I am told. Liberals tell me it is what we need in the United States: a single-payer system. Conservatives tell me that it is communism and that the Brits get terrible health care.
I am not sure the former is desirable, and I know the latter to be poppycock fed by a fury that is based on misinformation willingly received and willingly disseminated.
I have received care as a young man under the NHS and members of my family have been recipients through the years. I have spent long hours examining various health systems and a good deal of time taking to British doctors and professionals. I have also done the unlikely in this debate: talked to patients.
A dear relative was gravely ill a few years ago. I spent a week at her bedside in a large hospital in Kingston, just outside London. As she was sedated at the time, I had a lot of time to study the place.
It was big with wings specializing in everything from heart failure to eye surgery. It seemed to work pretty well, although the public wards were crowded.
But there were these takeaways: No one was refused, nor would be sent home early, and no surprise bill would come in the mail. My relative had a private health plan on top of the NHS standard and got a private room and good food.
The biggest difference is in cost. Health care spending accounts for 17.9 percent of GDP in the United States, whereas it accounts for just 9.7 percent of GDP in the United Kingdom. Germany, France and Canada all have different systems which come out in the same place as the UK, with service delivered for money spent.
Structural costs bring our bill up. All those women in your doctor’s office, arguing with insurance companies on the phone over “codes,” are not practicing medicine. They are engaged in a kind of health care roulette: Will they or will they not pay? Is it in the plan?
I am not sure the NHS is right for the United States, but structural overhaul is necessary. Wasted efforts and greed pervade the system.
By the way, I do not have a dog in this fight: I am on Medicare -- and that costs the taxpayer too much because of weak controls.
Llewellyn King is executive producer and host of White House Chronicle, on PBS. His email is llewellynking1@gmail.com. He’s based in Rhode Island and Washington, D.C.
Jordan Rau: Feds cracking down on short-staffed nursing homes
The federal government accelerated its crackdown on nursing homes that go days without a registered nurse by downgrading the rankings of a tenth of the nation’s homes on Medicare’s consumer website, new records show.
In its update in April to Nursing Home Compare, the Centers for Medicare & Medicaid Services gave its lowest star rating for staffing — one star on its five-star scale — to 1,638 homes. Most were downgraded because their payroll records reported no registered-nurse hours at all for four days or more, while the remainder failed to submit their payroll records or sent data that couldn’t be verified through an audit.
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If you would like a copy of this data, please email elucas@kff.org
“Once you’re past four days [without registered nursing], it’s probably beyond calling in sick,” said David Grabowski, a health policy professor at Harvard Medical School. “It’s probably a systemic problem.”
It was a tougher standard than Medicare had previously applied, when it demoted nursing homes with seven or more days without a registered nurse.
“Nurse staffing has the greatest impact on the quality of care nursing homes deliver, which is why CMS analyzed the relationship between staffing levels and outcomes,” the agency announced in March. “CMS found that as staffing levels increase, quality increases.”
The latest batch of payroll records, released in April, shows that even more nursing homes fell short of Medicare’s requirement that a registered nurse be on-site at least eight hours every day. Over the final three months of 2018, 2,633 of the nation’s 15,563 nursing homes reported that for four or more days, registered nurses worked fewer than eight hours, according to a Kaiser Health News analysis. Those facilities did not meet Medicare’s requirement even after counting nurses whose jobs are primarily administrative.
CMS has been alarmed at the frequency of understaffing of registered nurses — the most highly trained category of nurses in a home — since the government last year began requiring homes to submit payroll records to verify staffing levels. Before that, Nursing Home Compare relied on two-week snapshots nursing homes reported to health inspectors when they visited — a method officials worried was too easy to manipulate. The records show staffing on weekends is often particularly anemic.
CMS’s demotion of ratings on staffing is not as severe as it might seem, however. More than half of those homes were given a higher rating than one star for their overall assessment after CMS weighed inspection results and the facilities’ own measurement of residents’ health improvements.
That overall rating is the one that garners the most attention on Nursing Home Compare and that some hospitals use when recommending where discharged patients might go. Of the 1,638 demoted nursing homes, 277 were rated as average in overall quality (three stars), 175 received four stars, and 48 received the top rating of five stars.
Still, CMS’s overall changes to how the government assigns stars drew protests from nursing home groups. The American Health Care Association, a trade group for nursing homes, calculated that 36% of homes saw a drop in their ratings while 15% received improved ratings.
“By moving the scoring ‘goal posts’ for two components of the Five-Star system,” the association wrote, “CMS will cause more than 30 percent of nursing centers nationwide to lose one or more stars overnight — even though nothing changed in staffing levels and in quality of care, which is still being practiced and delivered every day.”
The association said in an email that the payroll records might exaggerate the absence of staff through unintentional omissions that homes make when submitting the data or because of problems on the government’s end. The association said it had raised concerns that salaried nurses face obstacles in recording time they worked above 40 hours a week. Also, the association added, homes must deduct a half-hour for every eight-hour shift for a meal break, even if the nurse worked through it.
“Some of our member nursing homes have told us that their data is not showing up correctly on Nursing Home Compare, making it appear that they do not have the nurses and other staff that they in fact do have on duty,” LeadingAge, an association of nonprofit medical providers including nursing homes, said last year.
Kaiser Health News has updated its interactive nursing home staffing tool with the latest data. You can use the tool to see the rating Medicare assigns to each facility for its registered nurse staffing and overall staffing levels. The tool also shows KHN-calculated ratios of patients to direct-care nurses and aides on the best- and worst-staffed days.
Jordan Rau: jrau@kff.org, @JordanRau
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Jordan Rau: In Vermont, no break after big breaks
Sarah Witter couldn’t get a break even though her leg had gotten several.
As she lay on a ski trail in Vermont last February, Witter, now 63, knew she hadn’t suffered a regular fall because she could not get up. An X-ray showed she had fractured two major bones in her lower left leg.
A surgeon at Rutland Regional Medical Center screwed two gleaming metal plates onto the bones to stabilize them. “I was very pleased with how things came together,” the doctor wrote in his operation notes.
But as spring ended, the wound started to hurt more. In June, Witter returned to the doctor. “He X-rayed it and said it broke,” she said. “And I was thinking, what broke? And he said, the plate. He said they do sometimes.”
The doctor performed another operation, removing the cracked plate and replacing it with a larger one.
Witter said she had been dutifully following all the instructions for her recovery, including going to physical therapy and keeping weight off her leg.
“I was, of course, thinking, ‘What did I do?’” Witter said. “The doctor said right off the bat it was nothing I did.”
Then the bill came.
The two surgeries Sarah Witter had following her skiing accident last February led to almost $100,000 in bills. Witter paid more than $18,000 of that out-of-pocket.
Total bill: $99,159 for emergency services, therapy and hospital care, including $52,587 for the first surgery and $43,208 for the second surgery. Altogether, Witter’s insurer, Aetna, paid $76,783. Witter paid $18,442 — including $7,808 for the second surgery. About half of Witter’s total expenses were copayments; another $7,410 was the portion of hospital charges that Aetna considered unreasonably high and refused to pay.
Service provider: Rutland Regional Medical Center, the largest community hospital in Vermont, performed the surgeries. Emergency services, anesthesia and physical therapy were done by other providers.
Medical service: In February, two metal plates called bone fixation devices and manufactured by Johnson & Johnson’s DePuy Synthes division were surgically attached to two lower leg bones Witter had fractured in a skiing accident. These plates are long, narrow pieces of metal with holes drilled in them at regular intervals for screws to attach them to the bones. A crack had developed in one of the plates running from the side of one of those holes to the edge of the plate. A second surgery was required to remove the plate and replace it.
What gives: When devices or treatments fail and need to be replaced or redone, patients (and their insurers) are expected to foot the bill. That may be understandable if a first course of antibiotics doesn’t clear a bronchitis, requiring a second drug. But it is more problematic — and far more expensive — when a piece of surgical hardware fails, whether it’s a pacemaker, a hip that dislocates in the days after surgery or a fractured metal plate.
Warranties, standard features at an electronic store or a car dealership, are rare for surgeries and in the medical device industry.
Dr. James Rickert, an orthopedic surgeon in Indiana and president of the Society for Patient Centered Orthopedics, said a plate like the one implanted in Witter’s leg can fail if the surgeon does not line it up correctly with the bone, although usually that causes the screws to break or back out. A plate also can fail if the patient puts too much weight on it or doesn’t follow other recovery instructions.
“When the plate breaks, it’s usually from overworking it, or a defect in the plate itself,” Rickert said. “The vast majority of people follow their instructions and are honest about it. If a person comes in and tells you they’ve been following their instructions and the surgery’s done properly, to me that’s a hardware failure.”
Nancy Foster, vice president for quality and patient safety policy at the American Hospital Association, said sometimes hospitals will not charge for a second surgery “if they were aware that it was something they did that caused the patient to need follow-up care.”
Rutland Regional, Witter’s hospital, would not discuss Witter’s care or bills, even though she gave it permission to do so. “The organization is not comfortable in getting into the specifics of an individual patient’s case,” a spokeswoman wrote. The hospital also declined to discuss under what circumstances, if any, it would discount a second surgery’s cost because of the first’s failure.
Hospitals do not consider it their responsibility if a medical device failure is the problem, Foster said. But manufacturers are reluctant to take the blame for an unsuccessful surgery.
Patients are usually out of luck when a second surgery is needed because of the failure of a medical device, like Sarah Witter’s broken plate. “The biggest annoyance with this whole thing, even though it took eight months out of my life,” Witter says, “is I hate to pay for it again, and the doctor clearly said it wasn’t anything I did.”
AdvaMed, the trade group for medical device manufacturers, said some companies will provide replacement devices if theirs failed, but others do not, especially if the failure of a procedure cannot “easily be attributeDed” to the device, the group said in a written statement.
“There are numerous factors outside of a manufacturer’s control — and unrelated to the safety of the device as designed — that could result in a device not performing as intended,” AdvaMed said.
These devices aren’t cheap: Witter’s hospital billed $9,706 for the first set of plates. It billed $12,860 for the replacement and an extra piece of equipment to attach it.
DePuy Synthes, which manufactured Witter’s plates, said in a written response that “in rare circumstances” metal plates “may fracture under normal weight-bearing or load-bearing in the absence of complete bone healing.” Even then, the company said, that is a chance patients have to take.
AdvaMed said it does not keep statistics on device performance, and DePuy did not respond to questions about how often its plates fail.
Resolution: The second surgery delayed Witter’s recovery by four months and prevented her from gardening, golfing, hiking, biking and motorcycling through the summer and fall, as she usually does. “I was pretty much chair-bound for 20 weeks,” she said.
In November, she was not able to join her husband and son on a trip to Iceland. Instead of volunteering at a nearby ski resort, as she had done for six years — and which carries the benefit of a free season pass — Witter said she tried selling hand warmers and lip balm out of a small kiosk and watching the skiers through a window. She said she had to quit after six days because of the pain in her feet.
“The biggest annoyance with this whole thing, even though it took eight months out of my life, is I hate to pay for it again, and the doctor clearly said it wasn’t anything I did,” she said.
Aetna said that while it does not allow providers to charge for indisputably inept medical mistakes such as leaving a surgical sponge in a patient or operating on the wrong limb, a broken plate does not qualify for such protection.
After reviewing Witter’s records, Aetna said it concluded the hospital had billed Witter for the portion of charges Aetna had considered excessive —a practice known as “balance billing.” While Aetna cannot reject those charges because the hospital does not have a contract with it, the spokesman said Aetna would try to negotiate with the hospital on Witter’s behalf to reduce the bill.
Rutland Regional, however, indicated in its statement that the only reason it would discount a bill was for people who had inadequate insurance or were suffering financial hardship from the size of the bills. Witter said she does not meet the hospital’s criteria.
The hospital invited her to meet with her surgeon and its chief financial officer.
The Takeaway: Witter brought up the seeming unfairness of the double charges to the hospital’s billing department as well as to her doctor, who, she said, was “charming,” but told her “he had no wiggle room to do anything.”
Patients are usually out of luck when a second surgery is needed because of the failure of a medical device or a surgeon’s mistake. A few places, most prominently the Geisinger Health System in Pennsylvania, offer warranties for hip and knee, spine and coronary artery bypass surgeries, among other procedures.
AdvaMed says that if a company provides a replacement, the hospital or surgeon is not supposed to bill Medicare or the patient for the equipment — even if the operation incurs charges.
Patients should scrutinize their bills and question their doctor and hospital or surgical center about charges for replacement devices.
If the doctor or hospital is partially at fault for the failure of the first procedure, request that part or all of the costs of the second surgery be waived. Get it in writing so you can make sure the billing department follows through. Also, in a medical market where insurers want to pay only for value-based care, let your insurer or employer’s human resources department know that you are being charged twice for the same surgery. Let them fight the battle for you.
Do you have an exorbitant or baffling medical bill? Join the KHN and NPR Bill-of-the-Month Club and tell us about your experience.
Jordan Rau: jrau@kff.org, @JordanRau
Ski trail in Stowe, Vt.
Martha Burk: A sad birthday for Medicare and Medicaid
Via OtherWords.org
July 30 marks a very important anniversary in our modern political history.
Fifty-three years ago in 1965, President Lyndon Johnson signed Medicare and Medicaid into law, creating two programs that would disproportionately improve the lives of older and low-income Americans — especially women.
Fast-forward to 2018, and both programs are very much under siege. Nowhere is the struggle starker than in the House Republican budget — titled “A Brighter American Future” — now on Capitol Hill.
The importance of Medicare as a source of women’s health coverage can’t be over-emphasized.
Older and disabled women make up more than half the total beneficiaries, and two-thirds of those 85 and over. This budget from hell takes a giant step toward privatizing the program by allowing insurance companies into the Medicare marketplace, which means benefits could be caught in a race to the bottom and become too paltry to cover all but the barest of medical needs.
Medicaid is the joint federal-state program that provides low-income people with health care. The proposed Republican budget repeals the Medicaid expansion that came with Obamacare, which will cause 14 million to 17 million people to lose coverage.
The Medicaid remnants that survive would be turned into block grants, allowing states to pick and choose who gets covered and what kind of benefits they get — no doubt with little or no federal oversight. That approach makes it easier to cut the program without saying how many people would be dropped, or how much benefits would be lowered.
Since poor women under retirement age and their children are the biggest group of beneficiaries, it stands to reason they’d also be the biggest losers.
But there’s more. Because women have more chronic health conditions like arthritis, hypertension, and osteoporosis, they’re more likely to need institutional care. Since Medicare generally doesn’t cover nursing home care, Medicaid provides such care for those with disabilities and/or very low incomes — and 60 percent of those folks are women.
What’s not in the budget? Long gone is the Obama-era effort close the Gingrich-Edwards tax loophole that allows some high-income individuals (possibly including Donald Trump) to avoid Medicare and Social Security payroll taxes altogether, resulting in billions of lost revenue for both programs.
The House Republican budget probably won’t pass in its present form. But with Republican majorities in both houses of Congress, even compromises are sure to favor more cuts.
“A Brighter American Future?” Hardly. This summer’s 53rd anniversary of Medicare and Medicaid looks like a less than happy one for those that depend on them most — namely women, but really anyone counting on growing older.
Martha Burk is the director of the Corporate Accountability Project for the National Council of Women’s Organizations (NCWO) and the author of the book Your Voice, Your Vote.
Jordan Rau: Thin and erratic staffing levels at many nursing homes
From Kaiser Health News
ITHACA, N.Y. — Most nursing homes had fewer nurses and caretaking staff than they had reported to the government, according to new federal data, bolstering the long-held suspicions of many families that staffing levels were often inadequate.
The records for the first time reveal frequent and significant fluctuations in day-to-day staffing, with particularly large shortfalls on weekends. On the worst-staffed days at an average facility, the new data show, on-duty personnel cared for nearly twice as many residents as they did when the staffing roster was fullest.
The data, analyzed by Kaiser Health News, come from daily payroll records Medicare only recently began gathering and publishing from more than 14,000 nursing homes, as required by the Affordable Care Act of 2010. Medicare previously had been rating each facility’s staffing levels based on the homes’ own unverified reports, making it possible to game the system.
The payroll records provide the strongest evidence that, over the past decade, the government’s five-star rating system for nursing homes often exaggerated staffing levels and rarely identified the periods of thin staffing that were common. Medicare is now relying on the new data to evaluate staffing, but the revamped star ratings still mask the erratic levels of people working from day to day.
At the Beechtree Center for Rehabilitation & Nursing here, Jay Vandemark, 47, who had a stroke last year, said he often roams the halls looking for an aide not already swamped with work when he needs help putting on his shirt.
Especially on weekends, he said, “it’s almost like a ghost town.”
Nearly 1.4 million people are cared for in skilled nursing facilities in the United States. When nursing homes are short-staffed, nurses and aides scramble to deliver meals, ferry bed-bound residents to the bathroom and answer calls for pain medication. Essential medical tasks such as repositioning a patient to avert bedsores can be overlooked when workers are overburdened, sometimes leading to avoidable hospitalizations.
“Volatility means there are gaps in care,” said David Stevenson, an associate professor of health policy at Vanderbilt University School of Medicine, in Nashville. “It’s not like the day-to-day life of nursing home residents and their needs vary substantially on a weekend and a weekday. They need to get dressed, to bathe and to eat every single day.”
Dr. David Gifford, a senior vice president at the American Health Care Association, a nursing home trade group, disagreed, saying there are legitimate reasons staffing varies. On weekends, for instance, there are fewer activities for residents and more family members around, he said.
“While staffing is important, what really matters is what the overall outcomes are,” he said.
While Medicare does not set a minimum resident-to-staff ratio, it does require the presence of a registered nurse for eight hours a day and a licensed nurse at all times.
The payroll records show that even facilities that Medicare rated positively for staffing levels on its Nursing Home Compare website, including Beechtree, were short nurses and aides on some days. On its best-staffed days, Beechtree had one aide for every eight residents, while on its lowest-staffed days the ratio was 1-to-18. Nursing levels also varied.
The Centers for Medicare & Medicaid Services, the federal agency that oversees nursing home inspections, said in a statement that it “is concerned and taking steps to address fluctuations in staffing levels” that have emerged from the new data. This month, it said it would lower ratings for nursing homes that had gone seven or more days without a registered nurse.
Beechtree’s payroll records showed similar staffing levels to those it had reported before. David Camerota, chief operating officer of Upstate Services Group, the for-profit chain that owns Beechtree, said in a statement that the facility has enough nurses and aides to properly care for its 120 residents. But, he said, like other nursing homes, Beechtree is in “a constant battle” to recruit and retain employees even as it has increased pay to be more competitive.
Camerota wrote that weekend staffing is a special challenge as employees are guaranteed every other weekend off. “This impacts our ability to have as many staff as we would really like to have,” he wrote.
New Rating Method Is Still Flawed
In April, the government started using daily payroll reports to calculate average staffing ratings, replacing the old method, which relied on homes to report staffing for the two weeks before an inspection. The homes sometimes anticipated when an inspection would happen and could staff up before it.
The new records show that on at least one day during the last three months of 2017 — the most recent period for which data were available — a quarter of facilities reported no registered nurses at work.
Medicare discouraged comparison of staffing under the two methods and said no one should expect them to “exactly match.” The agency said the methods measure different time periods and have different criteria for how to record hours that nurses worked. The nursing home industry also objected, with Gifford saying it was like comparing Fahrenheit and Celsius temperatures.
But several prominent researchers said the contrast was not only fair but also warranted, since Medicare is using the new data for the same purpose as the old: to rate nursing homes on its website. “It’s a worthwhile comparison,” said David Grabowski, a professor of health-care policy at Harvard Medical School.
Payroll records at Beechtree show that on its best-staffed days, it had one aide for every eight residents, but the ratio was 1-to-18 at the lowest staffing level.
Of the more than 14,000 nursing homes submitting payroll records, 7 in 10 had lower staffing using the new method, with a 12 percent average decrease, the data show. And as numerous studies have found, homes with lower staffing tended to have more health code violations — another crucial measure of quality.
Even with more reliable data, Medicare’s five-star rating system still has shortcomings. Medicare still assigns stars by comparing a home to other facilities, essentially grading on a curve. As a result, many homes have kept their rating even though their payroll records showed lower staffing than before. Also, Medicare did not rate more than 1,000 facilities, either because of data anomalies or because they were too new to have a staffing history.
There is no consensus on optimal staffing levels. Medicare has rebuffed requests to set specific minimums, declaring in 2016 that it preferred that facilities “make thoughtful, informed staffing plans” based on the needs of residents.
Still, since 2014, health inspectors have cited 1 in 8 nursing homes for having too few nurses, federal records show.
With nurse assistants earning an average of $13.23 an hour in 2017, nursing homes compete for workers not only with better-paying employers like hospitals, but also with retailers. Understaffing leads predictably to higher turnover.
“They get burned out and they quit,” said Adam Chandler, whose mother lived at Beechtree until her death earlier this year. “It’s been constant turmoil, and it never ends.”
Medicare’s payroll records for the nursing homes showed that there were, on average, 11 percent fewer nurses providing direct care on weekends and 8 percent fewer aides. Staffing levels fluctuated substantially during the week as well, when an aide at a typical home might have to care for as few as nine residents or as many as 14.
A Family Council Forms
Beechtree actually gets its best Medicare rating in the category of staffing, with four stars. (Its inspection citations and the frequency of declines in residents’ health dragged its overall star rating down to two of five.)
To Stan Hugo, a retired math teacher whose wife, Donna, 80, lives at Beechtree, staffing levels have long seemed inadequate. In 2017, he and a handful of other residents and family members became so dissatisfied that they formed a council to scrutinize the home’s operation. Medicare requires nursing home administrators to listen to such councils’ grievances and recommendations.
Sandy Ferreira, who makes health-care decisions for Effie Hamilton, a blind resident, said Hamilton broke her arm falling out of bed and has been hospitalized for dehydration and septic shock.
“Almost every problem we’ve had on the floor is one that could have been alleviated with enough and well-trained staff,” Ferreira said.
Beechtree declined to discuss individual residents but said it had investigated these complaints and did not find inadequate staffing on those days. Camerota also said that Medicare does not count assistants it hires to handle the simplest duties like making beds.
In recent months, Camerota said, Beechtree “has made major strides in listening to and addressing concerns related to staffing at the facility.”
Hugo agreed that Beechtree has increased daytime staffing during the week under the prodding of his council. On nights and weekends, he said, it still remained too low.
His wife has Alzheimer’s, uses a wheelchair and no longer talks. She enjoys music, and Hugo placed earphones on her head so she could listen to her favorite singers as he spoon-fed her lunch in the dining room on a recent Sunday.
As he does each day he visits, he counted each nursing assistant he saw tending residents, took a photograph of the official staffing log in the lobby and compared it to what he had observed. While he fed his wife, he noted two aides for the 40 residents on the floor — half what Medicare says is average at Beechtree.
“Weekends are terrible,” he said. While he’s regularly there overseeing his wife’s care, he wondered: “What about all these other residents? They don’t have people who come in.”
Bob Lord: The $170 billion lie in the GOP tax plan
Via OtherWords.org
House Republicans and Donald Trump are ballyhooing the wonders of their new tax plan. It’s called the “Tax Cuts and Jobs Act,” which we’re told will mean “More Jobs, Fairer Taxes, and Bigger Paychecks.”
Hallelujah! We can see the Promised Land!
But before we pop the champagne corks, let’s double-check the sticker price: $1.5 trillion over the next decade. That’s just shy of $5,000 for every man, woman and child in America. For a nation over $20 trillion in debt, that seems pricey.
But that’s only the beginning. The deeper costs of their tax plan are so large and so obvious that the failure of Republican leaders to disclose them is, for all practical purposes, a lie.
The premise of the House plan is, in fact, a $170 billion lie.
The vast majority of these proposed cuts — some 80 percent — go to the top of the income ladder. But to sell the plan as beneficial to the middle class, Republican House leaders included a tax credit of $300 for each family member, plus a larger credit of $1,600 for kids under 17.
Without that “Family Flexibility Credit,” the House plan would be a net benefit to far fewer families. Remarkably, however, the House Republicans crafted the Family Flexibility Credit to expire after only five years — after which middle-class families with college-aged kids will see a big tax hike.
So will the break be extended? Republican leaders promise it will be. But the $170 billion cost of extending the Family Flexibility Credit through 2027 isn’t included in the stated cost of their plan.
It’s worse than just that. The repeal of the federal estate tax, which is exclusively paid by a handful of multimillionaire families, will indirectly allow ultra-wealthy Americans and their heirs to avoid tens of billions in income tax. That lost income tax revenue isn’t reflected in the stated cost of the House plan either.
Nor are the tens, perhaps hundreds, of billions in revenue that will be lost when tax lawyers develop structures to squeeze tax savings out of the new 25 percent tax rate for so-called “business income” — a big discount from the otherwise applicable top rate of nearly 40 percent.
Amendments to address the concerns of powerful interest groups will likely raise the cost further. One example: A concern raised by multinational corporations regarding an excise tax provision was addressed by the House Ways and Means Committee, increasing the cost of the plan by $60 billion.
Even regular people will make adjustments that drive up the cost of the plan.
To minimize the impact of rules reducing the tax benefits they get from charitable contributions, some will bunch several years’ worth of gifts into a single year. If they no longer get a tax benefit from paying mortgage interest, some will forgo other investments that generate taxable income to pay their mortgages down at a faster rate.
None of this is news to Republican House tax writers.
But if their plan becomes law, you can count on those same Republicans to tell us how Social Security and Medicare benefits are driving the national debt too high and must be cut. In reality, they caused the problem themselves, by lying about the costs of their huge giveaway to the rich.
And that stinks.
Bob Lord is a veteran tax lawyer who practices and blogs in Phoenix. He’s an associate fellow of the Institute for Policy Studies.